TNT to challenge RM VAT exemption.

[NEWS]

TIMES ONLINE

One of Royal Mail’s biggest rivals has won the right to launch a legal challenge over the state group’s exemption from VAT.

TNT has been granted permission to apply for a judicial review of the exemption, which it said impedes competition in the postal market because other operators have to charge VAT.

TNT’s legal challenge comes as the European Commission is also looking at Britain’s operation of VAT exemption, along with the systems used by Germany and Sweden.

VAT is a crucial issue for Royal Mail’s competitors because banks and charities, which are large bulk mailers, are also VAT-exempt and so cannot recover VAT charges. TNT says that the financial groups and charities make up about 40 per cent of the postal market.

Nick Wells, of TNT Post, said: “This VAT distortion is subject to possible infringement proceedings by the European Commission. TNT Post is committed to providing its customers with an efficient and value-for-money service and will continue to fight for a level competitive playing field.â€

[F0zziebear]

Well here you go the little VAT issue I mentioned months ago on here. I may sound like some management manual, but sometimes actually know what I'm talking about. RM have a 17.5% head start on many contracts, especially banks. Even though RM have lost all of the major bank contracts (top 5) the competition will be making tiny profits relative the volumes they are processing.

What does this mean? It means that TNT and Uk Mail especially are vulnerable to any pricing changes, or wage changes. For example if all of their staff demand pay rises then these companies would make negetive returns.

VAT in Europe. TNT and DHL who have their own domestic company's have to be careful of challenging any regulation in this country as under EU law it might jeaporidse thier larger domestic businesses, especially in Germany.

The good news is a decision isn't due for a long time (bureraucracy) which means more pressure on these companies to deliver their own mail to make reasonable returns on their investment. The game ain't over yet, and as Adam & Al have said we want to be the company of choice.

Too the brazier's and upturned trolley's - mine's an under-cooked over burn't burger

F0zz

p.s. Chilli sauce?

[TrueBlueTerrier]

Ok EU should withdraw our vat exemption but also make anyone entering the postal market adhere to the universal delivery agreement that we have to - that would make for a level playing field. We would see real competition then, not the cherry picking and caring only about the top 10 companies that goes on at the moment.

[F0zziebear]

Hold on you want anyone who wants to enter the UK to have enough posties to deliver to any address in the UK. That isn't liberalisation and a waste of time and effort. If you don't believe in any competition and having a pure monopoly then that would make a lot more sense.

The problem at the moment is the case of an oligopoly such as seen in the airline industry. I am worried further down the line that the top three postal companies will be found guilty of price fixing. So put a put on that within 15 years there will be allegations of such a thing!

You heard it here

F0zzie

Dreaming of winning his bet and retiring to his own private isalnd just like Mr Golden Balls Branson