My thanks go to John Shearer of Mayell Shearer VAT Consultants for this article. My own thoughts are that, before taking up office, politicians should be compelled to run a business! I have no problems with levying a charge on carrier bags but why make it so complicated?
John says one might think that this item would probably be of interest only to inhabitants of Wales; however it also affects retailers in the rest of the UK who deliver goods to customers in Wales in carrier bags.
Basically the Welsh Assembly will, from 1 October 2011, introduce a charge on single-use carrier bags. Initially set at 5p per bag, every retailer in Wales and any who deliver into Wales in such bags, must charge this fee.
The fee will be treated as the minimum but will be deemed to include VAT if the retailer is VAT registered (thus: 4.17 pence for the bag plus VAT).
This will be quite tedious for retailers in and around Wales and how can this be controlled?
They are required to record how many bags they sell and to account for what they do with the proceeds.
All VAT registered businesses who supply more than 1,000 bags per annum must publish this record in its shop or on its website.
The Welsh Assembly has intimated that it ‘expects’ retailers to pass the proceeds to good causes in Wales.
Furthermore it is forbidden to give away a single single-use carrier bag and an offender could face a fine of up to £5,000 (which accountants will instantly recognise as the value of 100,000 bags!).
The Welsh Assembly also sets out detailed instructions as to the treatment of bags that are found to be not-fit-for-purpose.
Incidentally, if a retailer gives a customer a refund for a returned bag, this is not deductible from the gross amount because the bag was used to carry away goods.
Altogether the regulations make a good ‘read’ if one has nothing else to do and although the overall purpose is praiseworthy, the wording and the hopes behind the venture make me wonder if there may be some holes in it (a carrier bag with a leek?).
John’s website can be found by clicking http://www.mayellshearer.co.uk/