Guernsey Post Claims it is Saving The UK From Collecting VAT

An announcement from the Guernsey Post in the Guernsey Press claimed to reveal that the company is saving the UK from collecting VAT up to the tune of £5.6 million a year. This is VAT that has been collected under what is known as  the VAT Pre Paid Scheme where traders in the Channel Islands are able to pre-pay import VAT on items over £18 so that the goods do not have to go through customs. What  Guernsey Post fails to mention is the fact that whilst VAT has been collected on goods over £18 in value, even greater amounts of VAT has been lost on goods below £18 that qualify for LVCR. The majority of these LVCR qualifying items would have attracted VAT in the UK if they had not been routed offshore.

Similarly Jersey Post boasted in 2005 that it had collected over £8m in VAT for the UK Government but failed to mention that 40m of VAT was lost through LVCR giving a net loss of £32m in VAT to the UK Treasury. Most of that loss was due to Play.com.

Many traders in Guernsey and Jersey are now registered for VAT in the UK and don’t even bother sending goods over £18 in value from Jersey or Guernsey as that would just be a wasted journey at extra cost and for no tax advantage. Play.com and Guernsey based Thehut.com are VAT registered in the UK.

If these companies were prevented from circular shipping goods of less than £18 and were made to account for VAT on the UK mainland then that really would save money.

49 Comments

  1. More indefensible rubbish from interests in Guernsey. Don’t they know it costs nothing to collect VAT in the UK anyhow ? I certainly don’t get paid anything by HMRC for sending a cheque to them every three months.

  2. I guess that all the desperate comments we are seeing that are pro LVCR just go further to prove it is impossible to argue for it!

  3. I own a Guernsey florist business that exports to UK. So lets say you guys are successful and LVCR is reduced to 10 euros (the minimum within EU law apparently it can go to). I will have to raise my prices so the consumer loses out to pay the VAT. Fair enough you say. I will then have to pay Guernsey Post my VAT like i do now for my orders over £18. Due to loss in their business from the reduction in LVCR they will no doubt will start charging HMRC for this service which it does currently FOC. Either that or you will have to re-employ those hundereds of customs officers to process the VAT on these items that were got rid of with the introduction of LVCR. Fact is we never wanted the likes of amazon or HMV here but their business model for cd’s/dvd’s is reducing as downloads take over. And many of their cd’s are under a tenner so the reduction of LVCR within EU law of 10 euros minimum is not going to stop them. All you are succeeding in doing is harming locally owned and managed businesses in the Channel Isles with this (there are more of us than you think). Treasury wont get anything near £130m on this when you factor in those with product under 10 euro and the cost of administering VAT.

    1. Graham. We note you are a florist and that LVCR originally helped speed up transit of horticultural goods, so you are one of the original benefactors. In theory the UK could still allow Florists to benefit as EU law allows members states to exclude certain goods. We have not yet had a complaint from any UK florists as it would appear you do have what could be argued is an unfair advantage over UK based florists. However with regards to your points; some of our members have already lost their business due to companies in Guernsey abusing the VAT advantage so sympathy is muted. I’m sure you can imagine the feelings amongst UK business regarding this issue. Secondly we have many members that sell products other than CDs and DVDs and volumes of other products are increasing. The fact CD and DVD sales are falling (and whilst they are falling overall they are rising online) that doesn’t justify abusing LVCR and VAT. Thirdly we have answered the cost collection of VAT issue, and if there was no tax advantage why would you run a mail order business in Guernsey if most of your customers were in the UK ? Surely you’d have a UK warehouse and fulfilment centre, otherwise you’d have to ship stuff to Guernsey and post it back for extra cost but no tax advantage. If this was stopped nobody would do it so there would be nothing to collect. As for the fact competition from HMV etc is not welcome in Guernsey, that’s hardly surprising is it ? What do you expect HMV to do. Stay on the UK mainland with a 20% disadvantage and go out of business ? We have seen the information put out by the Guernsey Government and it does not stack up. This practice is indefensible.

      1. I thought you might like more of a balanced view but your response is predictable. My product is not a commodity and unique so i am not gaining an unfair price advantage being here – also a lot of my product is grown and made on Guernsey so why would I ship it to the UK to dispatch? I am a local person who owns my company. I am in Guernsey not for VAT or tax reasons but for family reasons. I pay Guernsey tax. I can think of at least 12 other businesses in my sector that will also be harmed if the LVCR is reduced – and my point is that your clamour for LVCR reduction has a real effect on CI businesses (we alone employ 30-40 at any one time). Yet online sales of CD’s from Guernsey have fallen according to Guernsey Post/Guernsey government. Downloads will remove this business from Guernsey within 5 years. LVCR has stayed at £18 for over 15 years so by inflation has reduced it 50% in real terms. I would also add that your figures and assumptions are about as reliable as Barry Brehaut representing Guernsey’s interests! The solution? Leave as is – dont drop the rate of LVCR as it wont stop them selling cd’s or greeting cards or comnputer cartridges – if not then ring fence or remove those industries or companies not Guernsey owned or managed? I dont want to move to the UK to run my business and why should I?

        1. Firstly I’m not sure which part of this site doesn’t make this totally clear but RAVAS speaks for many product sectors, not just CD’s and DVDs. CDs and DVDs are used as an example on this site because we have accurate and highly inconvenient (for the Channel Islands Authorities) data that shows a huge increase in online sales of CDs and DVDs, and a collapse in UK internet and high street retail whilst in contrast overall music sales gradually fall and paid for downloads remain peripheral. Secondly we have a member that’s trying to start a greetings card business but can’t because of the 20% advantage Moonpig get, so you are right to highlight the issue but for the wrong reasons. As for your other points, you say you are born in Guernsey. Fine no problem. Business in Guernsey. Fine no problem. Local grown product and local employees. Fine not an issue. Want to sell it VAT free in UK whilst everyone else in UK has to charge VAT.Hang on a minute! WHY ? What obligates us to accept you doing that ? If you were volunteering to pay import VAT through the pre-paid schemes (which as you will know are voluntary and not official EU schemes) then we’d have more respect but this constant whining about having to compete fairly by retaining a 20% advantage just doesn’t hold water. You don’t need to move to the UK. You can sell your homegrown products and pay (import) VAT just like we all have to. If not then sell it locally, but don’t try and convince us that you require a 20% advantage, but we don’t. Before 1983 LVCR didn’t exist and all VAT was pre-paid. What did you do then ? And finally I don’t know how many times we have to repeat this, but we don’t care who owns the businesses, or how many businesses there are in Guernsey, it’s the volume of VAT free product being circular shipped that is the issue. We don’t accept collecting VAT is expensive. It may have been in 1983 with some ancient manual system ticker tape and early calculators , but we now have computers, the internet and mechanised scanning. The cost of collection is an unquantified paper thin excuse. I’m sure there are private contractors who’d relish the job and in any case, as soon as you start doing that properly other than for home grown products like your own, it wouldn’t be worth being in the Channel Islands. There wouldn’t be a problem.

          1. If you have a competitive advantage by virtue of your climate for growing flowers in the CI then use it! And if the more efficient growers on the continent can beat you on price, then that’s fine too. The issue is one of FAIRNESS – plain and simple. If you can’t compete on a level playing field then you don’t deserve to be in business. The problem with LVCR is that it distorts the market and creates a unfair advantage which has been abused and continues to be abused and this is only going to get worse. Once the loophole is closed then businesses can compete equally and fairly – there really is no sensible argument for the current situation.

        2. OK Graham, let’s talk turkey. As far as the EU is concerned, the Channel Islands are an anachronistic, constitutional anomaly, being in the EEA, a Crown Dependency of an EU member-state, outside the EU but conveniently situated in close proximity to the European mainland, and with a tax regime attractive to tax-avoiders worldwide. For the EU, in the 21st century global economy, they have become an administrative inconvenience. The fact that any mail-order businesses are located on the islands at all, and here I’m not referring to indigenous exporters like yourself, is solely and uniquely to gain a competitive advantage over UK suppliers, and, as a direct result of the Treaury’s sheer incompetence, understanding or willingness to bother to police a European Directive, that was put in place precisely to aid those indigenous industries like yourselves.
          The panacea to this situation is really quite straightforward. The UK government have the power, under the guide lines of the directive, to exclude all those products from the advantages of LVCR, leaving the original agricultural and horticultural sectors intact. You should have nothing to fear.

  4. Graham. I think you misunderstand EU law which is not surprising given the biased information fed to the media by the Guernsey Government over the last 10 years. Lowering the relief is not the only thing the UK can do. They could ban all products other than flowers from the relief. If local industries need protecting that’s something the Guernsey Government should work on rather than building an industry that destroys UK business. Whilst we sympathise to a degree regarding your concerns about having to move offshore, now you know what UK business has been through over the last 10 years.

    1. you are misguided if you think guernsey government has deliberately set out to develop this sector to the detriment of uk businesses/governments. In fact they have been trying to reduce/discourage the direct sector but the problem is they had nothing they could do constructively due to constitutional/legal constraints on company formation and the laws here. I still believe you are looking for a scape goat to blame the failure of the independent retailers who have been forced out of business by the power of the supermarkets and amazons of this world. Retail has moved on. With or without the LVCR technology and the buying power of the huge retailers is changing the face of how we buy. Good luck!

      1. Graham, That’s rubbish. I know people who have been offered fulfilment by Guernsey companies and have also seen evidence of The Guernsey Commerce and Employment dept. touting for business. Greed is going to end this.

        1. Fulfilment companies may have been touting for business. However, there is a clear policy for government not to encourage third party fulfilment or UK companies by not providing housing licenses or consent for changes of use for buildings. If you have recent documentation then please supply and i will take it up with the Minister here as I have been opposed to companies re-locating operations here also.

          1. Er…isn’t that bit late Graham ? You have the biggest Music Retailer in the UK on the Island. Who’s left ? Not only that they have been forced to undercut their own shops. I think Guernsey can probably take the credit for destroying HMV. Your policy is not transparent, has no teeth, is entirely voluntary and is designed to “ensure the well-being and continued success of the fulfilment /mail order industry in the Island ” That means sell more stuff doesn’t it ? Its not the number of retailers we are concerned about. Its the amount of stuff they send into the UK VAT free, having exported it to the Island first.

          2. Graham, lets see the Guernsey minister come and speak to us here rather than making statements to the Guernsey Press that none of us ever get to comment on.

      2. And currently we have the buying power of large retailers plus a further 20% advantage. That’s indefensible.

  5. I think the comment about the increase in VAT that will be recovered from the CI is absolutely correct – but that is because all the companies abusing the system will move their operations back to the mainland. The issue of CD and DVD downloads is a bit of a red herring – you only have to look at the range of goods that Play, Hut Group and Amazon sell from the CI to see this is an abuse that is only going to grow, not recede. I have every sympathy with the original intended recipients of LVCR and hope that the government has the sense to retain it for perishable goods, but almost everything else that’s being routed via the CI is just a tax avoidance scam that hurts legitimate, honest UK businesses.

  6. I ran an online business that was successful until offshore VAT avoiding became dominant and destroyed it. This isn’t about shops vs internet or amazon vs independents. Its about onshore vs offshore pure and simple.

    1. We agree to disagree – to be honest I wasn’t expecting anyone to agree with me on this site (a very prosaic way of saying so Maria thanks for that). Just trying to show you that there is another side to the story and the issue is more complex than I think is made out as my business does not fit your stereotype.

      1. Yes I think we do disagree. Its not complicated at all. Its about one group with a 20% advantage screwing another group without it. Very simple.

          1. OK explain it more clearly then, because its not particularly clear. I agree we all face various competitive pressures, but you want a 20% head start as well ? Not only that but people like me have to suffer our own products coming back into the UK VAT free undercutting our mail order price forcing us to discount our UK customers. That’s OK is it ?

  7. Graham, I think I can say most of us have sympathy with your plight, however, as you are aware business takes no prisoners. Perhaps the Guernsey government should have had the foresight to ask itself exactly what kind of business model could ultimately succeed using a “smuggler’s charter”? Maybe that worked in the days of “Whiskey Galore” but not anymore.
    Yes you are right, retailing has moved on. For independent record shops, it moved on a long time ago. Virtually every remaining independent record shop owner started trading on the internet at least 10 years ago. Our niche loyal customers had the advantage of surfing the net, but knowing they could get face-to-face advice and recommendations over the counter too, and listen to more than 30 seconds of any particular track.
    This was fine, until the price disparity between CI internet retailers and home based ones became so great even loyal customers couldn’t resist saving enough to buy a fourth CD for every three purchased.
    So please don’t lecture us about retail. Cameron tells us we’re all in it together”, so let his actions speak as loudly as his words.

  8. Graham, I think we can help you. If LVCR is scrapped we can set up a UK mainland company structure, onshore accounting, warehousing and a limited company.We can also provide VAT registration. Beat your Guernsey competition by basing yourself offshore , in the heart of the UK market and close to your customers. This has many benefits such as avoiding the need for ferries.

  9. Dear RAVAS

    Do you really think the any company will relocate to the UK given the tax and cost implications.

    In reality what will happen is that these companies will relocate to another country and import via the EU market which will be totally legal and outside the UK control.

    This wont help any high street business, the UK government or independent retailers looking for an excuse to blame someone else for their failings.

    Volume purchasing power by far outweighs any VAT dis-advantage to the retailer.

    The old adage of beware of what you wish for springs to mind.

    You really need to open up to a constructive review of the system instead of just spouting rubbish and presenting incorrect facts. I too would like to see a review of the rules to stop illegal traders who are still based in the UK but claim they fulfil from the Channel Islands, along with removing the sham companies from the Islands and having the industry regulated.

    Whilst I agree it distorts the market, the cure in this instance causes more damage than the illness.

    The UK buyers will be the ones to pay the price of any changes , the postal operators will loose, the UK tax payer will loose out (paying to police the change), the economy would loose out – no winners.

    Way to go guys, good job well done!

    ps.
    Oh, and like other responses I have made I doubt this will be published by such a one sided biased set-up.

  10. Dear Kevin

    Firstly as is made clear in the introduction to this site it is a forum for Retailers in the UK affected by the abuse of LVCR not a general discussion site about the issues surrounding LVCR.

    We reserve the right to not approve comments that are pro LVCR abuse as that is not the purpose of this site. You are welcome to start your own pro LVCR abuse site.

    The purpose of this site is to end the current practice. Recently a senior HMRC official confirmed in writing to RAVAS that “the relief and the special VAT position of the Channel Islands were never intended to be exploited in this way to supply goods VAT free to UK consumers” We have had the same response from EU officials who made it clear that EU member states must prevent this kind of behaviour whether it’s from Jersey Switzerland or wherever.

    Finally we have had offensive comments sent to the site and we won’t put those on no matter who posts them. We do however distinguish passionate debate from pure insults.

    We have allowed your comment on here as we feel you make some points that UK contributors may wish to respond to.

    Regards

    RAVAS

  11. Kevin,
    First of all,as the only reason these companies are there is to take advantage of the VAT situation,then if there is no loophole,they won’t be there,therefore no policing.! I’m afraid so many of your statements were simply not true. I’m in the music business,both inretail and in distribution/management,so i know the discounts given to your Amazons,Play.com etc.Here you go
    Discount given Free VAT given by HMRC
    Company a 17.5% 20%
    Company b 18% 20%
    Company c 17.5% 20%
    Company d 15% 20%

    Companies a,b ,c and d include SONY,EMI,UNIVERSAL.
    So,no it’s not so much to do with bulk discounts.
    Your argument about the postal service losing out reminds me of rope makers complaining when hanging was abolished! The system is wrong,and if people have made a living from that ,then that’s their look out. Sorry,but i’ve paid VAT in my business for all of it’s 20 odd years,and i just cannot for the life of me see why someone selling the same goods should not! Can you tell me why this is ok Kevin?
    As for using the word “excuse” for our “failings”,don’t you just think it’s possible Kevin,that the VAT scam is a “reason” not an excuse?

  12. Personally I find the mentality ‘Nothing should be done as people will just move to Switzerland’ somewhat amusing…. It’s a bit like saying ‘If we tackle credit card fraud then home burglaries will go up as you’re just moving the problem’.

    Surely if something is wrong then it’s wrong, irrespective of there being a (rather tenuous) route that a particularly determined individual can go down. If the loophole were to close I don’t think you’d find many business clambering over themselves to move to Switzerland; there must be a reason why the majority of the offshore fulfilment industry have based themselves in Jersey and Guernsey.

  13. Hi Kevin, I appreciate you understand that market distortion is apparent and shows you see from both sides of the fence.
    Please understand the frustration of UK businesses who are faced with unfair online competition from the channels islands, I for one are among them running a website selling memory cards. Unfortunately if you do a search you will find the big players are all firmly placed in the channel islands and now due to their tax advantage have grown so strong that they are able to use volume purchases to gain even more market share.
    With the surge in computer technology it will not be hard to collect VAT, I am sure there are plenty of IT contractors waiting to offer solutions if LVCR is removed in the budget.
    I personally feel that removing LVCR quickly would be dangerous; giving 12 months notice should allows companies to restructure, however flower growers or other perishable goods should be viewed under a different light from non perishable goods and should be allowed to continue under new legislation.
    I would be interested to see how the removal of LVCR would affect you or your business?
    What business do your run, do you have UK mainland customers and do sell online?
    Best Regards
    Kevin

  14. “Volume purchasing power by far outweighs any VAT dis-advantage to the retailer.”

    I beg to differ. My discussions with suppliers have made it very clear that their CI accounts receive no better pricing deals than their mainland customers.

    My company negotiates with suppliers for volume discounts and I can say with complete certainty that even after volume discounts, the VAT disadvantage is still the biggest obstacle to fair competition.

    You cannot deny that a 20% retail price advantage will not give an unfair advantage to CI-based retailers.

    “Independent retailers looking for an excuse to blame someone else for their failings.”

    When faced with unfair competition no excuses are required. I’m happy to compete with other companies and run an efficient and effective business serving our customers as best we can.

    Your snide comments only make your position look increasingly desperate and indefensible.

  15. Daryl; I completely agree. We stock a range of products in a highly competitive marketplace where our suppliers make literally pennies per unit.

    Despite the problems caused by LVCR, we still have a large buying power as we manage to compete on the more expensive products that the CI companies have to pay VAT on. We have five major suppliers that are played off against one another so the argument that our problems are caused by the potential larger buying power of the CI companies just doesn’t hold water.

    It speaks volumes that we can usually undercut our offshore friends on the higher value stuff that falls over the LVCR threshold but they hammer us by 20% on the lower value, high volume items.

  16. Dear Ravas

    “Finally we have had offensive comments sent to the site and we won’t put those on no matter who posts them. We do however distinguish passionate debate from pure insults.” – that implies I have sent these types of comments previously, that’s not true!

    Anyway on with the debate – I do acknowledge that the market has been and is being distorted, what i am against is a knee jerk reaction by politicians looking to score political points without due care and process.

    In the grand scheme of things, the costs involved are relatively small compared to Tax avoidance and such schemes which cost the UK Government billions – that is not meant as a slight to UK small businesses, just stating a fact that there are considerably bigger problems, if the Government tackled these issues along with out of control Public spending VAT wouldn’t need to be so high and many of the issues would be removed – that is obviously a simplistic and generalised view.

    I would welcome a consultation period where all sides of the argument can be heard and a rational solution achieved – ie, those companies round tripping should face a levy to discourage this practice.

    Switzerland was an example, other jurisdictions will simply step up to fill any gap created by effecting the Channel Islands, if the ruling is made it should be Europe wide, this is highly unlikely as you have EU member states actually pushing for the relief to be increased as collecting the amounts at the moment is costing them more than they collect.

    Ultimately what I am saying is that there needs to be a proper understanding of the economical effect on all rather than just reaction to the current news story, I know you guys have been campaigning for a while and that’s your prerogative but a government has the obligation to ensure any ill side effects are taken into consideration before action..

    I would however like to draw a line between genuine CI owned companies and UK companies which are using the system.

    Please stop referring to all Channel Islanders like we are modern day Dick Turpin’s, this is not the case.

  17. Dear Kevin

    Thanks for your constructive posting. Just in case you missed it in our overview section it says “This website is not intended as an attack on The Channel Islands as we realise that the exploitation of LVCR takes place from other locations and in any case should be policed by the UK authorities. The reality is that the majority of the exploitation of LVCR takes place on the Channel Islands due to their convenient location within the UK market place (a fact that is widely promoted by companies offering fulfilment from the Islands for UK retail) and because the UK Government has done nothing to stop it”

    We didn’t mean to imply that you had posted offensive comments but as you can imagine we have had a few and there are many on Guernsey and Jersey based websites. We feel we have been very measured our comments.

    Two things we would like to clear up.

    1) Not all UK businesses are small shop keepers stuck in the past as we have been portrayed. We also know what online retail is. Most of us only sell online.

    2) and not all of us want to move offshore either. We like operating in our home country.

    We are pleased that you recognise circular shipping as an issue. Its a very simple issue. 20% pricing advantage is unassailable. We want a level playing field on price. The reason this is stirring up passions is avoiding VAT directly affects UK retailers.Its a punch in the face. Other tax issues are more subtle. If you can’t get close to the price, you can’t get the sale and you are dead in the water. We have members who have faced their own products been round tripped undercutting their own mail order. I’m sure you would not attempt to justify that!

    20% is a massive trading advantage. If circular shipping was to end we’d all get on better.

    Regards

    RAVAS

  18. Graham you are so right get these large UK company’s out of the island. People on here were never going to agree with you, but like you i am local and my business was started here i just hope the decision’s made are with a view to local business

    1. John – Yes but hang on. What do you sell ? If you circular ship UK products that is what we (UK retailers) have an issue with. I think there is a serious misunderstanding here. We do not accept ‘local’ companies taking UK products and selling them back to the UK VAT free so we can’t compete. We don’t care where you come from or who owns the company if you do that. It should stop. That is the main complaint. And large UK companies like HMV only went to Guernsey because they had to in order to compete with others doing it… I’m not convinced the views of UK retailers are understood. No circular shipping of UK products that we sell, unless VAT is levied on import. Period.

      1. Jeff i have a shop in the island and sell my items to local customers i don’t take orders then order them in i buy all my stock in at the start of the year and top up as needed so no round tripping form me i do agree that large company’s if they still are round tripping should stop and be sent back to the UK if it wasn’t for them no one would even be talking about it you ask any local company if they want them here the answer is NO. I didn’t set up shop to just sell to the UK i send my items all over the world also what about other places such as Switzerland and other’s do you have the same issue with them a large number of items i sell you cant even get in the UK

        1. OK . If you are a shop selling to customers locally sounds fair. What’s your website. Would be interested to see it.

        2. My dear Jean, honi soit qui mal y pense, as the actress said to the bishop!

          1. I’m in the music business too, but my recent experience tops it all. Last week I purchased an unbelievebly cheaply-priced CD set by one of the UK’s biggest selling artists, on Amazon Marketplace. Even given what I know about LVCR, Amazon’s fees and bulk mail shipping discounts, I couldn’t work out how the retailer could make any money. In fact, based on the most optimistic acessment of the “bulk” discounts given by record companies, the retailer should have been losing around £3-£4 a copy. Low and behold, the CD has now arrived.
            An Argentinian copy, (illegal under BPI parallel import rules), sent by a Swiss registered company, sent from Switzerland abusing LVCR and with a return address to Greenford in the UK. These are the lengths companies will now go to to profit from the abuse of our tax regime.
            Unbelievable!!

  19. Ravas,

    Just thought i would point out that:

    “Dear Kevin

    Thanks for your constructive posting. Just in case you missed it in our overview section it says “This website is not intended as an attack on The Channel Islands as we realise that the exploitation of LVCR takes place from other locations and in any case should be policed by the UK authorities”

    doesnt really make any sense, look at the title of your website!!!

    “Channel Islands Mail Order – The Facts”

    If this website is not an attack on the Channel Islands but an attack on LVCR generally it would make sense to change your website title would it not maybe to something like:

    “LVCR Mail Order Abuse”

    1. Jonny , That’s a fair point. This site is not intended to attack the Channel Islands. We just felt people would know what we meant by Channel Islands Mail Order rather than LVCR Abuse which is a rather technical term. Also virtually all of this trade comes from the Channel Islands due to their convenient position.

      We will be changing the banner shortly..

      Regards

      RAVAS

  20. Jeff – This website demonstrates that certain UK retailers wish to blame others for their failings. You cannot stop free trade and every developed Country across the world has a similar system running to the LVCR, where the collection of such small taxes is deemed more costly than any tax gained.

    Do you honestly believe that any reduction in the LVCR limit will provide the answer to your problems, I don’t think it will?

    The large retailers such as Amazon, Tesco and Asda have enormous purchasing power whether onshore or off and they will decimate any small retailer who tries to compete directly with them, what will you and RAVAS do then?

    I suppose you will then create the pressure group known as RASPBERRIES (Retailers Against Supermarkets Permanently Beating Every Retailer In Every Sector)

    I do not expect this to be published on your website as it is evident you only wish to present one view.

    Regards
    Peter

    1. I think you are on the wrong website. Can I just remind you that we are complaining about a 20% tax fiddle not supermarkets. Supermarkets are not an issue to me. They don’t sell what I sell and never will. However certain Channel Island based retailers are buying the same specialist product I buy from a UK distributor and shipping it back in VAT free. Supermarkets have got nothing to do with it!

    2. David, I really think you are missing the fundamental issues surrounding the argument.
      I hate to be the bearer of bad news, but although we are indeed in a global market, I’m afraid the market isn’t quite as free as you suggest.
      The EC, as a unified trading bloc, protects itself very sensibly by levying import tarriffs at different levels on different goods.
      This particular directive, LVCR, as you know, allows goods below a certain threshold to be imported from without the EC into the EC without the recipient being made liable for any tarrifs or VAT.
      BUT, and here’s the BIG BUT, and this applies to goods from any country without the EC, each member state has to ensure this directive is NOT BEING ABUSED in order to supply low value goods into the EC on an INDUSTRIAL SCALE, purely to avoid taxation or in any way distorting the market within the EU.
      At the moment it is the Channel Islands who are providing a plarform for this abuse to take place. It could easily be somewhere else in the world, but the same rules apply.

  21. Marek – Your comments are duly noted. I think we can agree to disagree as it will become evident that the collection of any taxes for low cost items entering the UK will cost more to collect than any tax gain for the Treasury coffers.
    Any accountant or financial adviser will tell you that if costs out way the benefit then there can be no justification for its pursuit.

    1. All this needs is the application of an anti-avoidance principle to circular shipping by Customs enforcement and problem solved. There is no reason LVCR cannot operate as it is now but what needs to be removed from it is UK/EU product being circular shipped. Many of these products cannot be obtained outside the UK so in order to obtain them companies have to set up clearly abusive circular shipping arrangements. If most of your customers are in the UK and you are taking goods offshore and sending them back its obvious what you are doing even if you do only order once a year. If that is successfully challenged in the EU courts then we could find this practice history. I suspect that is what is going to happen. Its not in the interests of the UK/EU to remove LVCR but I can see a strong case for them having to take robust action against avoidance and abuse of LVCR.

    2. Absolute rot. As soon as LVCR is removed almost all the retailers will move back to the UK and there will no extra VAT to collect.

      That argument is very weak indeed, and again avoids the issue of fairness. That principal in itself is a perfectly adequate justification.

      A fair business environment is all we ask, and trying to defend the opposite point of view is unethical and amoral.

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