1. Threshold setting in UK trade statistics compilation
Event Name Here
12/02/2007
Threshold setting in UK trade statistics compilation
Trade Statistics Presented by Mark Ellis
Project Name: HMRC v1.8

2. Why Thresholds and what types?
Reduce burdens on economic operators (statistical providers) while retaining quality
Exemption Thresholds – defines the value above which taxable persons are required to provide Intrastat data (mandatory)
Simplification Thresholds – defines the value below which taxable persons can be exempted from providing some Intrastat data (optional and not used in UK)
Individual transaction Thresholds – allows Member States to permit simplifications to low value transactions (optional but used in UK)
Specific “optional variable” thresholds for additional data items, e.g. Delivery terms Thresholds – requires operators to provide delivery terms data under certain circumstances (optional but used in UK)

3. Exemption Thresholds EU legislation requires Member States to collect
Event Name Here
12/02/2007
Exemption Thresholds
EU legislation requires Member States to collect
93% by value of intra-EU trade for Arrivals and
97% by value for Dispatches
We set national exemption thresholds to collect the required percentages
Traders whose intra-EU trade exceeds these thresholds must submit Intrastat declarations
We review annually to ensure we continue to meet legal requirements
Separate thresholds for dispatches and arrivals
For 2014, UK thresholds are
Arrivals - £1.2m
Dispatches - £250k
Project Name: HMRC v1.8

4. Factors affecting the threshold
Reasons why threshold may change
Forecasting of the threshold and VAT data show steady increase/decrease, influenced by;
External information from the Bank of England on GDP and inflation
Exchange rates
The economy of the 17 nations in the euro
A drop in the EU capture rate
e.g. Arrival capture rate dropped from 95% to 93% for 2014

5. Methodology on Threshold calculation – How?
2 Stages
Stage 1 - Analysis of VAT data
UK VAT return data for the last three years is examined
36 historical 12-month rolling cycles used to analyse trends in VAT data
Threshold calculated for each rolling 12 month cycle
Stage 2 - Extrapolation
Forecasts a threshold for the next calendar year assuming linear growth
Accounts for probable effects of inflation, trade growth and other factors
Resulting model is tested by estimating the threshold values for those month periods

6. Forecasting of the arrival threshold
Event Name Here
12/02/2007
Forecasting of the arrival threshold
Chart shows the forecasting of 2014 Arrivals threshold using 93 per cent threshold for one, two and three years’ data.
The one year forecast shows only slight increases compared to the upward trend for the two year and three year forecast.
Similar forecasting is done for the dispatches threshold
Source: HMRC Overseas Trade Statistics
Project Name: HMRC v1.8

7. Forecasting of the dispatches threshold
Event Name Here
12/02/2007
Forecasting of the dispatches threshold
Chart shows the forecasting of 2014 dispatches threshold using 97 per cent threshold for one, two and three years’ data.
Apart from the three year forecast which is fairly flat, the one year and two year forecast shows downward trend.
This is due to slow economic delivery
Source: HMRC Overseas Trade Statistics
Project Name: HMRC v1.8

8. Analysing the effect of threshold change on arrivals and dispatches
Event Name Here
12/02/2007
Analysing the effect of threshold change on arrivals and dispatches
Table 1 : The effect of threshold on Arrivals and Dispatches for the period Jul 2012_Jun 2013
Threshold
Number of Arrival traders
Number of Dispatches traders
Combined traders
Arrivals
Dispatches
 600,000
250,000
15,597
18,702
27,009
600,000
300,000
17,026
25,653
900,000
12,514
23,488
1,200,000
10,527
17,371
21,753
275,000
16,497
20,979
15,773
20,336
350,000
14,538
19,245
The table shows the effect of potential new thresholds on the current data for arrivals and dispatches.
It provides information on potential reductions in the number of Intrastat traders.
We then examine the
Source: HMRC Overseas Trade Statistics
Project Name: HMRC v1.8

9. How Eurostat calculate UK capture rate
The Table shows how Eurostat calculated UK compliance with legal requirements.
From 2010 to 2012, UK has been under-collecting the required 95% target for arrivals.
As for dispatches, UK met the target of 97% in 2011 and 2012.

10. Delivery Terms (DT) Threshold
Event Name Here
12/02/2007
Delivery Terms (DT) Threshold
UK collects invoice value data and uses the DT to convert to statistical value
Only PSI who are above the DT threshold are required to submit DT
UK DT threshold set to £24m in 2014
Methodology
Same process as the exemption threshold
Threshold is set to request information only from those traders who account for 70% of total Intrastat value
This is around 5%-6% of total population (e.g out of traders)
Only one DT threshold is calculated for both Arrivals and Dispatches, whichever is lower
As the UK collects invoice value and converts this to statistical value, it sets the Delivery Terms Threshold in order to collect sufficient data in order to do the conversion through the ACS factors. To reduce the burden on lower value traders, the Delivery Terms Threshold is set at a level so that around 70 per cent of total Intrastat value is collected with delivery terms. This places the declarative burden on around the largest five per cent of traders only
Project Name: HMRC v1.8

11. Thank you – any questions?
HM Revenue & Customs
21 Victoria Avenue Southend-on-Sea SS99 1AA
Telephone no