Treasury to close loophole that allows VAT-free DVDs

[lloydi]

The government is to change the tax rules that have allowed retailers to avoid paying VAT by sending goods from the Channel Islands.
Low Value Consignment Relief (LVCR) will not apply to goods sent from the Channel Islands to the UK from 1 April.
The loophole has been used increasingly in recent years by companies selling CDs and DVDs online, such as Play.com, Tesco and Amazon.
The government said the loophole was now costing £140m a year.

The chief minister of Guernsey, Deputy Lyndon Trott, said the change would have a "significant impact" on the islands.
The maximum price of the goods allowed under LVCR was cut from £18 to £15 on 1 November following an announcement in the Budget in March.
"These reforms will ensure that UK companies, especially small and medium-sized enterprises, can compete on a level playing field with those larger companies with the resources to set up operations in the Channel Islands," said David Gauke, Exchequer Secretary to the Treasury.

LVCR was originally established as a VAT exemption for goods coming from outside the EU. The idea was to prevent EU members having to collect small amounts of VAT, when collecting it would cost more than it was worth.

The problem has been that the Channel Islands are treated as being outside the EU for VAT purposes.
'Moral market' Big retailers have been sending low-price goods to the Channel Islands and then having them sent back individually to customers in the UK.
The government said that LVCR will continue to apply to goods coming from other countries outside the EU.
"The removal of this major market distortion should be welcomed by all UK businesses that wish to trade online," said Richard Allen, spokesperson for Retailers Against VAT Avoidance, a group that has campaigned against LVCR.

"The VAT Loophole is not only contra to the basic principles of EU VAT law but is also contrary to any sense of fair play and a 'moral market'."
Jersey's Economic Development Minister, Senator Alan Maclean, said more than 1,700 people were employed in the fulfilment industry across the Channel Islands.
Channel Island legislators are worried about the amount of notice they have been given of the closing of the loophole.

http://www.bbc.co.uk/news/business-15646470

[CzarJunkie]

It's about fucking time........

[Fear345]

It's about fucking time........

Good news for your cheetham hill Chinese DVD factory then.


Sent from my iPhone using Tapatalk

[blaggard]

Knock effect will be shorter waits for stuff to be delivered!

[Roach-Rampino]

£140 million is not to be sniffed at.

[Mule]

Although I've taken advantage of it in the past I think this is quite reasonable.

I wonder if they might just move operations elsewhere and do the same thing though, there are plenty of Non-EU European countries to choose from.

I do think it's a bit short notice though, 1700 people have just been told they're going to be out of a job.

[CzarJunkie]

there are plenty of Non-EU European countries to choose from.

The Channel Islands made it so appealing because it's a UK territory served by Royal Mail. Whereas other options outside the EU, such as Switzerland, are not.

[CzarJunkie]

I do think it's a bit short notice though, 1700 people have just been told they're going to be out of a job.

What about the 1000's who have lost their jobs over recent years in small and medium sized businesses on the mainland who have been unable to compete or relocate?

[Mule]

What about the 1000's who have lost their jobs over recent years in small and medium sized businesses on the mainland who have been unable to compete or relocate?

Not ideal obviously but two wrongs don't make a right. The 1700 losing their jobs in Guernsey won't undo past injustices and it's not the fault of the employees anyway.

[ZX7R]

Didn't Play.com just sell up to a Japanese company? Good move...

[Bald Bouncer]

It isn't short notice they said they would close this loophole a long time ago so they all knew it was coming.

[Mystical_2K]

Didn't Play.com just sell up to a Japanese company? Good move...

Yes, http://www.guardian.co.uk/business/2011/sep/21/playcom-sold-rakuten-japan

they knew this was going to happen and apparently so did the buyers as the price reflects this

[MsDG]

It's about fucking time........

Why? While I sympathise for local businesses, do you think that when play closes that the people who were purchasing CD's/DVD's from play will suddenly start buying them from local sources at 20% more?

What I suspect that this move will only push people faster to online media... which I suspect will just mean more servers in tonga!

[ZX7R]

Clamping down on nzb sites and now this. I see a future where you'll be only able to watch films from one source - the cinema!

[Chubbs]

Knock effect will be shorter waits for stuff to be delivered!

Ordered some toys from Play the other day an noticed some premium delivery options as well as free snail mail, opted for free and it still only took two days.

Although I've had to wait an age before as well.

£140 million is not to be sniffed at.

Boots chemist don't pay their dues in this country, didn't Vodafone walk away from their tax bill as well?

We give aid to countries that run space programs, which I find very backward!

How much have we paid to that bastard IMF fund?

It's not to be sniffed at but two webbed fingered fuckers won this amount of the Euro mills a month ago!

In the scheme of things it's fuck all.

[CzarJunkie]

Why? While I sympathise for local businesses, do you think that when play closes that the people who were purchasing CD's/DVD's from play will suddenly start buying them from local sources at 20% more?

What I suspect that this move will only push people faster to online media... which I suspect will just mean more servers in tonga!

It didn't just affect dvd/cd sales, it was any product under £18. So many other retail sectors were affected too. Many small and medium sized businesses have gone to the wall in the last few years because of this loophole. The Channel Islands had some of the biggest fulfilment centres in the country.