Send the (c)ash

Children's shoes
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I recently attended a two-day international conference in honour of Dr John Avery Jones. The eminent Dr Avery Jones is a tax luminary who in April of this year reached the statutory retirement age for a judge of the First-tier Tribunal (Tax and Chancery Chamber). The conference was billed as ‘the largest and most prestigious gathering in London of experts in international and UK domestic taxation for over a decade’.

Unfortunately for the organisers, the conference coincided with the eruption of the Icelandic volcano, Eyjafjallajökull (for those still struggling to pronounce that, click here). While the resulting disruption of flights made attendance at the conference impossible for some, it also added a little ‘Dunkirk spirit’ to an already emotional occasion. One had the strangely unnerving sense of international tax experts ‘at play’ – and of course the bow-tie count was off the scale.

Each speaker was allocated a slot of around 15 minutes – the tax equivalent of speed-dating. My personal highlights were:

  • An appearance by Herr Flick (in reality a director of the Max Planck Institute for Intellectual Property, Competition and Tax Law in Munich) to talk about ‘Exemption and tax credit in German tax treaties’. ‘Vee haff sree tax veppons’ he muttered, darkly.
  • The stint by a Tony Blair look-alike (sound-alike, grin-alike) from LSE who asked ‘Are there tax principles in Pringles?’ Answer: Yes/No/Still don’t know/Do I look bovvered?

In a tour de force of multi-media presentation, the session devoted to zero-rating of children’s shoes (which happens to be one of my pet subjects – see October 09 blog) was accompanied by a slide showing a picture of a shoe. Yes, a shoe!

Seriously though, in Denmark, where children’s shoes are taxed at the standard Danish VAT rate of 25%, they are not significantly more expensive than in the UK. So who, one might ask, is benefitting from the UK’s zero-rate?

While I’m on this subject, it appears from an article in the 6th August 2009 issue of Taxation magazine (which vies with Decanter and the Law Society Gazette to get to the top of my reading pile) that, if you took the European clothing price average as 100, the UK average price for men and women’s clothing (taxable at the standard rate) was 91, and for children’s clothing (which is zero-rated) was 86. The price difference between adult and children’s clothing in the UK was therefore 5%, not 17.5%. Zero-rating is a tax relief. The intention is to ensure that no tax burden falls on the man in the street but this is obviously not what is happening.

During the morning tea break on day one, I baited a Scot employed by HMRC who was in pre-election purdah. Was it true, I asked him, that the ash cloud was Reykjavik’s response to an email from the Treasury – which it had forgotten to check before sending – asking the Icelandic Finance Ministry for the UK government’s money back (the money invested in Icesave by UK residents and refunded by the UK Treasury when Landsbanki collapsed)? He didn’t answer, so draw your own conclusions.

As proceedings came to a close on day two, Dr Avery Jones delivered his punch line: he was not, in fact, retiring until 2011, so we could all look forward to a repeat performance next year. It’s already in my diary.

By the way, if, as a result of the disruption caused by the volcanic ash cloud, you are ‘worried’ about being able to meet tax, National Insurance, VAT or other payments owed to HMRC, you are invited to get in touch with their Business Payment Support Service. Just don’t mention my theory about Icesave …

Tax lawyer specialising in business tax, SDLT and VAT

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