Royal Mail faces legal fight over tax exemptions

Oliver Smith
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THE GOVERNMENT’S plan to privatise the Royal Mail came under attack this weekend as the postal service faces legal action over its VAT exemption status as well as the increasing possibility of strike action over its float.

TNT Post UK will go to the High Court on 26 November to challenge the Royal Mail’s 20 per cent VAT exemption that it receives as part of its status as the so-called universal provider of British postal services.

“Royal Mail should be open to the pressures of competition and no longer enjoy the government gift of a 20 per cent cost advantage over its competition. A level playing field of competition will allow better services to be developed and new jobs to be created,” said TNT Post UK chief executive, Nick Wells.

TNT Post UK will challenge Royal Mail’s exemption on all services apart from stamps and those directly connected to its obligation to provide a universal service six days a week.

If successful the legal action could hurt Royal Mail’s profits, which last year were £440m on £9.3bn revenue.

Yesterday the Communication Workers Union (CWU) general secretary Billy Hayes told The Andrew Marr Show he is “absolutely confident” of a yes vote in proposed postal worker strike action.

Royal Mail staff are due to vote on proposed strike action over the government’s privatisation plans, as well as a current pay offer, on 2 October.

“We’re about protecting our people’s terms and conditions. That’s what this dispute is about,” Hayes said.

Royal Mail chief executive Moya Greene said on Thursday that she recognises concerns over privatisation, but that it is an important step to protect the business.

“It is now time for Royal Mail and the CWU to come to a new agreement for our people going forward. Talk of a ballot for industrial action makes no sense when there is a significant three-year deal on the table and negotiations are ongoing.”