Channel Island VAT Loophole To Close Within a Year
|August 3, 2011||Posted by RAVAS under VAT|
According to an article in the Daily Telegraph the EU has told the UK that the Channel Islands VAT Loophole is an abuse of EU law and that the UK is within its legal rights to act and abolish the “abusive and restrictive” trade specifically emanating from The Channel Islands. It predicts action by the end of the year.
RAVAS has been party to legal advice since 2007 that made it clear that the UK could take action to stop LVCR being used for abusive practices which in this case involves fulfilment to UK customers from an offshore location purely to avoid VAT – an activity that makes no commercial sense other than for tax avoidance. LVCR is an import relief and was never intended as a method of avoiding the VAT that ordinarily would be due on sales made within the UK.
If the UK doesn’t have to refer the matter back to the EU and has been given the right to take action with the EU’s support, then we should see a rapid end to this trade.
We watch developments with interest.