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.