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VAT loophole closure confirmed

VAT loophole closure confirmed

March 16, 2012

Challenge from Jersey and Guernsey governments dismissed.

Channel Island-based retailers will no longer be able to sell electronics VAT-free as the judicial review launched by the governments of Jersey and Guernsey has dismissed the legal challenge against the ruling on 15 March, reports The Guardian.

Although the decision by Mr Justice Mitting is expected to attract an appeal, the trade ban, which is valued at more than £500 million ($786 million/€601 million) a year and costs approximately £130 million ($204 million/€156 million) in lost VAT, is expected to proceed.

The Guardian reports that the counsel for the Tresury and HM Revenue & Customs argued publicly for the first time that the “industrial-scale exploitation” of low value consignement relief (LVCR) was “abusive and amounted to tax avoidance”.

Lawyers for Jersey’s economic development minister Alan Maclean commented: “If this proceeds it will result in more than a 50 percent increase in the overall level of unemployment in Jersey, with the consequent social and economic consequences – that is to say, a catastrophe.”

One Channel Islander stated: “I guess I just feel deflated by the whole sad VAT story. I’m going to lose my job. But I do understand it’s been an unfair advantage. At this point in time, [the island] has nothing else.”

A number of printer consumables retailers had previously expressed dissatisfaction with the VAT loophole. Chris Holgate of cartridge reseller Refresh eCommerce estimated that the “vast majority” of cartridges are currently shipped from the Channel Islands.

“Almost all of the major players have moved offshire. On products that don’t make a huge margin, you can’t compete. It’s quite soul-destroying as we have had some customers thinking we are ripping them off.”

Categories : City News

Tags : Legal Market Data Retail

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