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LVCR Featured on BBC News Online and Radio 4’s ‘The World At One’

RAVAS and the abuse of LVCR by the Channel Islands  Fulfilment Industry was featured both online and on Radio 4 on the 4th February 2011 (you can find both reports by scrolling down).  Devon businessman Chris Holgate spoke to the BBC News Online about the damaging effect that LVCR exploitation is having on his business Refresh Cartridges.

Refresh Cartridges has been offered fulfillment services from three different companies in the last twelve months however so far Chris has refused to make his staff on the mainland redundant and move the business out to the Channel Islands in order to avoid charging and collecting VAT. RAVAS commends Chris for his moral stance on this issue and his support for UK business.

The reports  also  featured Rodney Brouard, from the Guernsey Bulk Mailers Association, surrounded by ladies packing flowers. Mr Brouard implied that this kind of horticultural business is the core of  Guernsey LVCR trade and that the impact of Guernesy based VAT free trade on the UK mainland has been “blown out of all proportion” . He goes on to state that most CDs and DVDs are sold through supermarkets in the UK.  However, as any music buyer will know, supermarkets only sell chart albums, and none of the many hundreds of thousands of non-chart and back catalogue CD and DVD releases, whilst 50% of Blue ray discs were sold online VAT free in 2010 (source British Video Association).

Mr. Brouard also conveniently ignores the fact that one of  the “twelve” companies in Guernsey is the highly successful online fulfilment operator  thehut.com who, in addition to servicing their own websites (including Woolworths and Zavvi) are also shipping vast amounts of products via Guernsey for a number of major UK retailers. Along with the Guernsey based HMV.com, (internet arm of the biggest high street music retailer in the UK) thehut.com are contributing significantly to a distortion in  UK internet mail order market and the decline of UK high street retail.

Mr Brouard then goes on to argue that collecting VAT would be “too expensive” for the UK government – a paper thin excuse that ignores the fact there would be no VAT to collect if VAT was imposed because nobody would bother setting up in The Channel Islands. The Channel Islands account for the largest proportion of LVCR exploitation (75% – UK Govt. estimate) .

To argue that ‘doing nothing’ is the cheaper alternative when it also encourages an ever increasing number of  legitimate UK businesses to either go to the wall or move offshore is self-evidently, utter nonsense. Mr Brouard is also clearly unaware of  UK’s obligation under EU law to prevent evasion, avoidance, or abuse resulting from LVCR. This blatant abuse of the tax system must end now and Mr. Brouard’s badly informed views as the chairman of the Guernsey Bulk Mailing Association have made it clear why.

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13 Responses to LVCR Featured on BBC News Online and Radio 4’s ‘The World At One’

  1. They certainly wouldn’t have to worry about the cost of collecting the VAT (which by the way is zero anyway because companies have to send the VAT, not the other way around) because if the abuse of the loophole was stopped, why would anybody ship the goods out to the channel islands and back in the first place…unbelievable…

    This abuse must stop and soon…

  2. Mr Brouard clearly knows very little about the impact of his ‘industry’ on music retail in the UK. Supermarkets only sell chart albums, so if you want anything other than that then you have to buy it online. The hundreds of thousands of albums that used to be sold by independent retailers until they all got put out of business by this tax avoidance arrangement are now only available online, and online retailers are now all offshore. Selling goods for ‘help the aged’ won’t mask the truth behind this tax avoidance arrangement. I hope David Cameron was watching this broadcast and that it has alerted him to a scam that should be closed down as soon as possible.

  3. I went in to my local Sainsbury’s store today and literally the only music they had on offer was Now 77, Coronation Street – The Album and Michael Buble.

    Not wanting to be cynical but if Rodney Brouard thinks that is suffient musical material to satisfy the population, without them having to go online and buy offshore, then he needs his head examining.

  4. They don’t sell any music in my local Tesco….

  5. No need for thousands of customs officers to stop this little number. Just one work experience bod in a customs uniform, in a port-a-cabin on Portsmouth dock,and soon the back log will be so big from Jersey and Guernsey nobody will bother ordering from there again. Problem solved.

  6. There used to be four record shops in my area. There is now nothing for miles. I’d have to go into London to find one. As a result I buy online. That’s not because I want to (I’d love to spend an afternoon browsing a record shop) but because there is nowhere else to go. And guess what…everybody I buy from online is in the Channel Islands!

  7. I can’t believe the naivety of Rodney Brouard as to where people in the UK buy their CDs. He’s obviously been living a cushy life, too close to France for far too long “Let them eat cake”

  8. It’s no wonder the excuses from those involved in this get more and more pathetic, the abuse of this scheme can simply not be argued against. I’m not blaming the Channel Islands themselves or even the retailers who are taking advantage of LVCR, who wouldn’t if they could? The UK government is as fault for letting this continue for so long and the onus is on them to sort it out before they are forced to by the EU.

  9. There is no reason to remove LVCR as it was introduced fairly for flower growers in the channel islands so the best route would be to fine tune the law so that it allows LVCR on highly perishable goods only.

    Jersey and Guernsey need to come into line and force companies on their lands to charge VAT themselves and then pay this directly to the treasury, then we wont need to increase customs numbers.

    Either that or our goverment gives us some relief and allows us to compete on a level playing field.

    Having a behemoth like Tesco in the channel islands is very worrying for every market in the UK, the sheer size of their range of products under £18.00 will affect many business markets.

    While LVCR is left in its current format the abuse will grow.

  10. Unfortunately for all these mail-order houses, there is a stark ethical, moral and just dimension to this argument. Should the UK government be encouraging UK companies to avoid paying their fare share of tax to their own Treasury? The answer is self-evident and there are a number of “young” political organisations willing and able to take up this gauntlet on behalf of the people; witness the recent Arcadia and Vodaphone demonstrations. Newsnight itself revealed that the Treasury is seeking to recover £20bn from 22 companies, probably a gross under-estimate, but even so 20% of the value of government “cuts”. The Treasury is now also intimating that it is “actively” looking into LVCR, but from past experience, we all know, even now, they lack a clear understanding of their responsibities under the EU directive itself, regarding prevention of abuse, and will have to be dragged screaming before anything will be done. It is the prospect of a severe decline in government revenues overall, as a result of a failing economy, that will keep the issue of tax avoidance firmly on the agenda. In this climate, together with EU pressure, I am convinced they will ultimately have no choice but to adhere to the spirit if not the letter of the law in the operation of this directive. It is only a matter of time.

  11. It’s a crying shame that we are closing day centres for the elderly and disabled and closing down public libraries, whilst allowing this VAT scandal to continue.

  12. I still cant believe that this abuse is still going on. Whilst our high streets increasingly resemble some ‘Wild West’ B movie complete with tumble-weed, nothing is done. I would have thought that the Conservatives/Liberals would be the natural allies of the small trader/shop-keeper…

    The previous government has attempted to have a ‘strong words, quietly spoken’ dialog with the Channel Islands governments on this issue, but, as Dawn Primarolo stated, the results were ‘disappointing’

    This is no longer a case of a CD’s/DVD’s being targeted… or memory cards, or printer cartridges. Google ‘The hut group’ and discover the multiple acquisitions that they have made over the past year….. your local high street may be desolate now, but there is worse to come if this is not stopped now.

    To continue the ‘Wild West’ theme – its time to ‘kick some ass’, and soon!