VAT change needed for TNT Post to launch UK end-to-end servi

[TrueBlueTerrier]

VAT change needed for TNT Post to launch UK end-to-end service

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TNT Post has said it is considering running further trials this year for end-to-end bulk mail delivery services in the UK, but said today that talk of launching a full service had been “overstated”.

The company, part of Dutch postal service PostNL, has had ambitions for years to provide bulk mail and direct mail delivery services in the UK to include the last mile.

It has trialled the service in Liverpool, but a major hurdle remains the issue of VAT.

As universal service provider, Royal Mail is exempt from charging the sales tax on mailings, whereas TNT Post UK would currently have to apply the 20% tax.

The company has been lobbying industry regulator Ofcom since it took over from Postcomm last year, and yesterday TNT Post UK chief executive Nick Wells told the Financial Times to “watch this space” regarding the extension of the company’s plans this year, possibly to include “orange postmen” on the streets.

However, a spokesperson for TNT Post in the UK told Post&Parcel that the article had suggested a full service would be launched, head-to-head against Royal Mail, which wasn’t the case.

“Nick was talking about new locations for trials,” said spokesperson Eimear Galvin. “It’s something that’s been under consideration, but nothing is being launched. The company cannot roll anything out until there’s changes in the VAT regime, and that’s something the government has to agree to change.”

TNT Post UK, which did post the Financial Times article on its blog stating the intentions to break Royal Mail’s “near monopoly” of the last mile of letter delivery, currently delivers to around 26m households in the UK.

Competition

This is mainly in the Downstream Access market, the most liberalised part of the UK letters market, where companies collect and process bulk mail before injecting the items into the Royal Mail network for the final stage of delivery.

One of the largest alternatives in the Downstream Access market, TNT Post UK currently claims to process about 17% of the mail of the average UK household, handling 200m items per month with 1,500 staff and a network of 8,000 delivery distributors nationwide. TNT Post does offer doorstep leaflet delivery services, but in the full end-to-end mail delivery chain Royal Mail currently has around a 99% market share.

Last September, TNT Post UK issued new research it commissioned into fully liberalised postal markets in Europe, which it said supported its view that Ofcom should bring Royal Mail onto a level playing field with other players in the market in areas like VAT.

The report suggested full end-to-end competition could improve the quality of universal services by putting pressure on incumbent operators to modernise and improve efficiency.

TNT Post suggested to the regulator that a form of zonal pricing could help Royal Mail protect its universal service while opening the door to full competition in the marketplace.

[Lounge Lizard]

Nothing new here. "It has trialled the service in Liverpool" and we'd know they were serious if they trialled the service in the Highlands and Islands or some other remote part of the UK.

[POSTMAN]

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TNT Post UK to trial postmen on London's streets

Britain's second largest postal firm TNT Post is to trial postmen on the streets of west London next month as it steps up ambitions to eventually rival state-owned Royal Mail Group as the UK's postal provider.

TNT Post UK, which is owned by Dutch mail company PostNL NV and handles more than 300 million items a month in the UK, will run test deliveries to homes and businesses in the capital from mid-April after a successful tryout in Liverpool.

The firm currently collects and sorts post before handing it over to Royal Mail to deliver what is known as the 'final mile' to residential addresses and businesses.

TNT Post UK wants to deliver this service itself but before its orange and black clad postal workers hit the streets permanently it is fighting to get a Royal Mail VAT exemption on the final mile removed first. Any other company wanting to offer a delivery service are subject to VAT.

"We want to make a significant investment in infrastructure and create thousands of jobs in the UK but the government is doing little to help us to do this," TNT Post UK Chief Executive Nick Wells said in a statement on Thursday.

Postal regulator Ofcom has said that it will assess on a case-by-case basis any interest in providing so-called 'end-to-end competition' in the UK, where a postal operator receives the letters and delivers to an address without using Royal Mail's network.

TNT Post UK, which processes around 17 percent of mail in Britain, also said on Thursday that it had signed an agreement with Tesco to handle up to 180 million items a year for the world's third-biggest retailer. A value for the deal was not given.

On Wednesday Britain's plans to privatise Royal Mail moved a step closer after EU regulators approved government plans to free the company of its deficit-ridden pension scheme.