Channel islands VAT loophole should be closed say lobbyists

Last Saturday, April 16th, was Independent Record Store Day and online accountants may be interested to learn that lobbyists used the occasion to ask the coalition to close a VAT loophole that lets large businesses undercut the smaller independent stores.

The Forum of Private Business and the pressure group RAVAS want to see the demise of the Low Value Consignment Relief. The LVCR lets retailers set up their distribution centres in the Channel Islands and avoid paying VAT on items valued at less than £18.

In his March budget, George Osborne announced that LVCR would be reduced to £15 in November this year but the lobbyists want it scrapped completely and hope that the EU can pressurise the government to act.

At the time, some VAT experts said the Chancellor’s move was more of a PR proposal than a serious attempt to tackle tax avoidance.

Jane Bennett, from the FPB, explained that the majority of the main music industry players post CDs from Jersey and Guernsey to consumers who have purchased them over the Internet. Because these items attract the LVCR they are 20% cheaper than they would be if purchased on the UK mainland and independent retailers simply cannot compete.

However, now that the European Union has intervened in the debate, we may see this uncompetitive practice, which has been going on for too long, outlawed, she concluded.

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