Whilst RAVAS is disappointed in the weak reduction of the LVCR threshold to £15 in November, the clear intention to tackle VAT avoidance through LVCR is welcome and in particular the clarification that LVCR is being “exploited for a purpose it was not intended for” – terminology that is used to describe a tax abuse.
Whilst a reduction in the LVCR threshold to £15 will have little immediate effect, a BBC Jersey TV News Report reacted to the Budget yesterday with concerns that local business was going to lose the trading advantage that makes internet mail order from the Channel Islands viable. Politicians from Jersey seemed less sure over the right to use the relief and a commentator from accountancy firm Price Waterhouse Coopers described the use of the relief in terms of ‘abuse’.
The question for UK retailers is why should the Channel Islands retailers even be allowed this advantage in the first place ? The fact that the fulfilment industry will be unviable without a tax break in our view proves the unfairness of this arrangement. The logical place for fulfilment to take place for any Jersey or Guernsey based company would be the UK mainland where the customers are.
However the real significance of George Osborne’s statement is that it puts a shadow over the legality of the current practices and if further action is taken as promised, this industry may well be dead and buried within 12 months.
BBC Channel Islands: