Clause 18 - Joint and several liability of traders in supply chain where tax unpaid
Finance Bill
4:45 pm
Mr George Osborne (Tatton, Conservative)
I hope that if I accumulate enough yellow cards, I will be suspended. I live in hope.
The serious point is that if a single mobile phone manufacturer dumps a large number of mobile phone handsets on to the market on a particular day, the price can vary by as much as £10 per handset. Mobile phones are also subject to the whims of fashion. I have a 17-year-old brother, and every time I go to my parents' house for lunch or dinner he has a new mobile phone. It irritates me and my other brothers—and my parents even more—that he has a new mobile phone every time we see him, but such phones are subject to fashion.
It is simply not possible for the industry to ascertain the open-market value of a mobile phone. It would be fine if Customs were saying that the price had to be so low that it was obviously suspicious. If it were the equivalent of someone saying, ''You can have a Rolls-Royce for £5,000'', anyone would know that something dodgy was going on. If that is the spirit of the Bill, it should be explicit in the wording, but it is not.
There is also the operational presumption that VAT has not been paid, because the telephones were purchased at a price below that paid by any previous purchaser in the supply chain. Again, that presumes a knowledge that is not available in the commercial market. How is someone supposed to know how much the person who supplied them with a consignment of mobile phones paid for it, or how much the person who supplied that person paid for it? That is unknowable in a free market. The industry could therefore fall victim to the clause through no fault of its own.
Finally, there appears to be an incongruity between the Bill and the Customs and Excise consultation document. The Minister will be aware that paragraph 13 of that document states that Customs will deem that a business knew or had reasonable grounds to suspect that VAT on a supply had not or would not be paid if
''it has made a gain or benefit from the suppliers' failure to account for the VAT''.
The concept of gain by the taxable person is not contained in the Bill.