Royal Mail’s main competitors are calling on the government to scrap the VAT exemption status enjoyed by the UK’s main postal operator.

They say that although Royal Mail delivers around 99.8 per cent of the country’s mail, its VAT advantage is undermining the competition of its 18 licensed competitors.

Postcomm, the industry regulator, is considering the views of postal operators and other firms to devise a framework that will begin to relax the current legislation and encourage competition in the UK postal market.

Nick Wells, chief executive of TNT Post UK, said: “We want to create jobs, we want to innovate, we want to deliver for our customers but we are being held back by the Royal Mail VAT advantage. It has to go.”

Research commissioned by TNT Post found that opening the postal market to deregulation would benefit the UK economy by £229 million.

It also found that competition in the postal industry has created 3,000 new jobs in the last four years, a figure which could double by 2016.

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