VAT shock for Government hits Royal Mail privatisation plans

[TrueBlueTerrier]

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Sell off could mean immediate 20% price rise

£1 first class stamp “a reality”

Calls to halt sell off

The prospect of an immediate price rise of 20% became very real this week as private carrier TNT Post UK confirmed it was applying to the High Court to review Royal Mail’s VAT exemption.

TNT argues that, following privatisation, many of Royal Mail’s services should be subject to VAT as is the case for all private carriers.

Save Our Royal Mail Campaign Director Mario Dunn said:

“A company like TNT would not incur the legal expense of such a case if it did not have a strong chance of succeeding. Businesses and charities will suffer large cost increases should VAT be introduced on letters considered to be outside of the universal service obligation. Certainly the Government should halt the sell off until the conclusion of the case has been reached”.

There is also a real danger that a judicial ruling could see VAT applied to those Royal Mail services that are not subject to price regulation.

Dunn said:

“The link between price regulated stamps, e.g. Second Class postage and the universal service obligation is straightforward. If a judge decides that VAT should apply to non-regulated products then the prospect of a first class stamp costing £1 in the next couple of years becomes a reality”.

TNT Post UK have long argued that Royal Mail’s services should be subject to VAT, but have waited until the Government has announced it is proceeding with its privatisation plans before launching legal action.

Mario Dunn said:

“This is yet another risk associated with privatisation. VAT on stamps, further prices rises, cutback to rural services. It is getting more and more difficult to see an upside to this sell off”.

Ends

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[Lounge Lizard]

"TNT argues that, following privatisation, many of Royal Mail’s services should be subject to VAT as is the case for all private carriers." - so really TNT are making an argument AGAINST privatisation. With friends like that ....

[Shambles]

[pinstripe]

Well yes, but then TNT wouldn't be able to make their profits if they had to pay a 'private rival' the proper price to deliver their junk. They want competition, the want privatisation, but only if they come out of it richer.

[barbario]

The Government stand to make about 2 or 3 £billion from the sale of Royal Mail.I very much doubt that they give a toss for the customers.

[baldrick]

The Government stand to make about 2 or 3 £billion from the sale of Royal Mail.I very much doubt that they give a toss for the customers.

But financial companies or private investors who are considering buying shares might reconsider.

[Pinky 1]

The Government stand to make about 2 or 3 £billion from the sale of Royal Mail.I very much doubt that they give a toss for the customers.

But financial companies or private investors who are considering buying shares might reconsider.

I doubt that, as long as they can make a profit they'll be happy. Customer Service is a very poor second compared with the Profit and Loss account.

[baldrick]

The Government stand to make about 2 or 3 £billion from the sale of Royal Mail.I very much doubt that they give a toss for the customers.

But financial companies or private investors who are considering buying shares might reconsider.

I doubt that, as long as they can make a profit they'll be happy. Customer Service is a very poor second compared with the Profit and Loss account.

Yes but the profits will be affected if a privatised Royal Mail has to pay VAT like other private mail companies.

[Budfrog]

Maybe the Govt would be happy to see a privatised Royal Mail pay VAT could be win on the sale and .... win, win, win, win on the VAT