Customs Launches VAT Test Case Against Dolland & Aitchison

by Robin Pilgrim, LawAndTax-News.com, London

08 March 2005

The Telegraph reported at the weekend that the UK's Customs and Excise Department has launched a test case against high street optician, Dolland & Aitchison over the firm's use of a so-called "tax loophole" employed by many major retailers to sell goods free from VAT.

Under current tax law, goods worth less than £18 can be sold to UK citizens from outside the EU exclusive of VAT. Attention was recently drawn to the fact that although the exemption is intended to benefit small businesses, firms such as Tesco, Amazon, Boots, and Dolland & Aitchison have taken advantage of it by establishing operations in the Channel Islands.

According to the Telegraph, in the case to be brought before the ECJ, Customs will argue that the contact lenses sent out by D&A's Jersey subsidiary are worth more than £18.

However, the optician is expected to counter that the lenses themselves are valued at less than £18, with the remainder of the bill relating to "professional services", such as prescribing the lenses.

Speaking to the UK newspaper, a spokesman for the Customs & Excise Department confirmed that if the ECJ rules in its favour, the case may be used to pursue other retailers.

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