If you run a business on the UK mainland selling anything that can be sold mail order up to a value of £18 and have to account for VAT then from the 4th of January 2011, when VAT goes up from 17.5% to 20%, you will have to suffer a 2.5% increase in VAT whilst your Channel Island based competitors will avoid the increase and be able to sell the same goods in the UK VAT free. Furthermore those who can afford to avoid VAT in The Channel Islands – through the exploitation of LVCR – have effectively been handed a 2.5% increase in their profit margin!
HMRC and The Treasury could end this scandalous market distortion and tax avoidance today, just as they could have prevented it at any time since 1995, but they have failed to do so.
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