Dividend?

https://www.podbean.com/ep/pb-37vmk-13b671b

When is a dividend not a dividend? 

Perhaps when it is smashing your nose into a bloody pulp with a cast iron frying pan in an orgy of rhinoplastic destruction and then convincing yourself that you are more handsome because the prominent pustule sitting on your nostril, threatening to burst into a volcanic eruption of infectious ejaculate, is now gone? You have taken sovereignty over your nose and exercised control of your battered visage, and lo and behold, one less pustule stares back at you in the bathroom mirror. It no longer mocks your very existence or belittles the over self confident rating of your beauty. 

That has to be a good thing. 

I was reminded of dividends recently upon return from Spain. 

The shop assistant in the small ‘pueblo blanca’ that is Mijas in Andalusia, was keen to point out that leaving the EU customs union and single market was a blessing for us British shoppers in Spain. You might be scratching your head at this point and wondering in what way this could be true? 

Now for the boring bit, but stay awake…this might affect you the next time if and when you go across the channel. Many goods and services in Spain attract an extra charge which I think is called ‘IVA’ or ‘Impuesto sobre el Valor Añadido’ for short. It is an additional 20% of the price for some items, and the blow is softened by including it in the ticket price. So, you will see €100 on the ticket, but the IVA is the hidden €20 within it. I’m not fooled by this sleight of hand, except after a few lunchtime vinos in the afternoon when my defences are down due to the rosy hue the world has taken on. Please don’t leave me in charge of my wallet, especially in a shop selling whisky, watches, women or motorbikes. I have been known to waste cash on fripperies in distant and exotic places such as Dubai, Amsterdam and Bodmin.

So, you pay IVA for your tapas, Rioja and bullfight tickets. It might not escape your attention that these three items are not usually taken back with you on the flight home to the UK. It is customary to consume them at the point of sale unless you are some weirdo who takes pleasure in packing cold dishes of ‘boquerones al la plancha’ with your underwear. Therefore you will not be bothered with import duty or VAT.

In Mijas, the Brexit dividend showed itself, and as the assistant was only too pleased to tell us, it was that we could claim back the 20% IVA we were paying for our goods. This could be done at Malaga airport after filling out the necessary paperwork and getting it stamped and checked at the customs desk. We were glad to partake of this bonanza by applying the logic of knowing that 20% of bugger all is the same as bugger all, but 20% of ‘a lot’ is still ‘a lot’. Mind, it means a little bit of bureaucracy at the shop and then again at the airport, and a claim form posted to the Madrid office…but 20% is a very nice reduction. 

Flushed with the feeling of a bit of a bargain, Ann and I decided it was time for lunch and some reflection on the day over a ‘vino tinto’. At that point, an ugly thought intruded. 

“Hang on a minute, we are not paying Spanish VAT…but we are bringing stuff into the UK; surely the UK will not let us get away with paying 20% less?” 

We have been lulled into a sense of security over the last few decades when crossing borders in the EU. ‘Nothing to Declare’ has always been the option because the obvious was true even if we did not consider it. Because we were in a ‘customs union’, paying IVA in Spain meant VAT was also paid for the UK. Unless you were importing guns, children or cocaine, customs was a doddle. It was the green lane all the way to Maplethorpe from Malaga, cases bulging with any goodies bought from the Andalusian markets. 

A quick google search made it clear that there might be an issue with claiming the IVA in Spain and then expecting to walk straight into London’s customs paying nothing. We are not used to being bag searched and vinyl fingered at the UK border, and we did not intend to start now. There is an allowance of about £360 worth of goods you can import; below that, you can walk through with a calm mind. Mind, this is £350 in total, not for an individual item. 

What to do? The Mijas shop had already registered the sale to Spanish tax authorities…do they talk to UK tax authorities? Would we be on a ‘watch list’ at Gatwick? Would we hear “please follow me, sir” from a burly border guard armed with a truncheon, vaseline, a shiny badge and the attitude of a Rottweiler whose black leathery testicles have been set on fire with a kitchen blowtorch? I did not want to find out. 

We decided to declare our goods at the UK border and see what happens. 

As many of you have experienced, getting back into the UK has been relatively easy once you go through passport control and pick up your baggage. You will know of two routes through customs, the Red lane and the Green lane. Almost without exception, everyone goes through Green, especially from EU destinations. We have been used to ‘having nothing to declare’, so the habit has formed that we do so without giving a second thought to import duties. EU customs regulations have meant that many Customs officers have forgotten where the vinyl gloves are, and their tubs of lubricant are so old there is moss growing on them. I am sure some officers secretly wish to catch a miscreant in the green lane to break up the monotony of watching hordes of sun-burned tourists return red-faced from the Costa Del Sol carrying nothing more valuable than a sombrero and straw donkey. But, and you might have noticed, we are not in the EU. The rules have changed. 

And so it was that a stream of returnees headed towards the green lane like salmon returning to spawn up a Scottish river. But we broke ranks at the last moment and headed towards Red. We were then on our own. Nobody else joined us from the throng. A brightly lit corridor led to a lonely customs desk. The silence at this point was conspicuous and tangible. The happy chatter of passengers on their way home? Gone in a wispy moment like the steam from a stream of penguin piss in the antarctic air. The desk had no member of staff standing ready to process us through. There was a simple sign reading ‘please ring for attention’. To read it, I had to wipe away the cobwebs gathered there following months of underuse.

After what seemed like an epoch, a UK Customs and Border Officer ambled towards the desk, eyeing us with curiosity. I could see the quizzical look in her eye as if she was thinking, “who are these two lunatics”? 

“Can I help you?” she said. 

Well, after ringing a bell with a sign saying that was the way to get attention, then yes, attention was required. This was clearly an unusual turn of events for her, but something that would have been covered in basic training. Still, much like an engine failure after take-off is covered in pilot training, she had rarely had to deal with it in reality. 

“We have something to declare.”

I would have thought this was an unproblematic phrase to use standing, as we were, in the ‘Something to Declare’ lane. To me, this was the most obvious and possibly the best and most appropriate phrase I could have used. 

“Sorry?” This was spoken as a verbal ‘step back in amazement’. 

“We have something to declare”.

“Oh!”  

This bit of information was something of a surprise to her despite our location. 

“We have just returned from Spain and bought some goods, having claimed back the tax from the Spanish Authorities in Malaga”. 

“Oh, right!”

“I think we have to declare it?”

“Oh, yes, of course…well, you’re honest! Most people go through the green lane with their goods.” 

Clearly, we were an oddity and a rare occurrence.  

“I’ll get my colleague and work out what we should do”. She then ambled back into the office to discuss the best course of action with her colleague. After about 5 minutes, she returned to the desk with paperwork and the information that we had to pay VAT on the items. Her colleague followed to see for himself this rarity.

“You wish to declare goods from Spain? Well, you’re honest. Most people…”

“…go through the green lane, we know”. I did not actually say this as it is bad form to interrupt an Officer of the law in the middle of their duties. Border Force, Customs and Police officers are best left to think they are in charge because…they are in charge and have big head-banging sticks. They also have the power to keep you in detention for hours if they suspect you are taking the piss. You can be arrested for just making their day difficult. It is best not to put their backs up with jokes about drugs, bombs and asylum. 

The two officers then did a little calculation and finally informed us how much we would pay in VAT. 

Turns out, it was a few pounds more than the 20% return of IVA from Spain. 

We paid up, bid them farewell and returned to the teeming melee in the Arrivals hall.

I am tempted to tell the eager shop assistant in Mijas that we indeed could enjoy the benefits of not being in the EU, including claiming the IVA. I would also add that we would end up paying more in VAT back home. Therefore, as a selling point, it was a dead duck and about as attractive an offer as a colonic irrigation with a cold Vindaloo as a flushing agent. The process also meant paperwork on both sides of the EU border and involving increased time and  expense. 

There might be a lesson there for the wider economy?

Putting aside the legality of either paying IVA or VAT, we have an excellent example of a dividend that feels almost as good as smashing oneself in the face with a cast iron frying pan.