Home » VAT » Major LVCR Retailers Sell Up as UK Government Prepares to Deal Final Blow to LVCR Abuse.

Major LVCR Retailers Sell Up as UK Government Prepares to Deal Final Blow to LVCR Abuse.

A recent article in the Mail On Sunday confirmed that the drop in LVCR to £15 is far from the final measures that the UK Government intends to introduce to combat the abuse of LVCR.  The sudden sale of Play.com for a relatively small amount of money, the sale of moonpig.com the failure of thehut.com to float and the stalled sales of both Thompson and Morgan and Healthspan all appear to point towards something on the horizon that may have an effect on LVCR traders.

Since RAVAS successfully complained to the European Commission about the UK Governments failure to prevent the abuse of  LVCR  and the resultant tax avoidance, we are confident that ultimately action will be taken to close down this abuse completely.

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126 Responses to Major LVCR Retailers Sell Up as UK Government Prepares to Deal Final Blow to LVCR Abuse.

  1. Justice at last!, I will soon be free to start off my website again selling products online without unfair competition.

    Well done RAVAS for you relentless pressure on the government to swing it back to a level playing field.

    When the announcement finally arrives lets look forward to the green shoots of new businesses in the UK, less unemployment and more funds in HMRC coffers.

    WERE ALL IN THIS TOGETHER!!!

  2. I won’t believe it until it happens but this is the most positive newspaper article I’ve seen in a long time. I’m sure we’ll see the usual Channel Island whiners complaining they have to compete on the same footing as everyone else. Oh the injustice of it!

  3. The Champagne is in the fridge…..

  4. Anyone want to buy my offshore mail order company ? Going cheap…..

  5. As a company we have somehow managed to double our turnover in the last couple of years while being in direct competition with dozens of Jersey and Guernsey based sellers who have an immediate advantage over us. I can only begin to imagine what our growth would have been like if we had been on an even playing field. Trying to compete in an incredibly competitive marketplace when your main competitors have a 20% advantage over you isn’t at all easy and it’s not surprising that so many legitimate mainland companies have fallen by the wayside.

    So often I was tempted to make our UK staff redundant and move offshore but England is my home; I was born here, educated here and as an adult I wanted to employ here. It was also clear that the situation wasn’t sustainable and that LVCR abuse was stunting our potential online growth as a country. Rather than running it seemed right to challenge what was going on and I’m so proud of what RAVAS has achieved.

    Although LVCR abuse has served as a handicap for us, I have never felt like blaming any of our offshore competitors for their conduct up until now. When you take it down to basics, business is business. My problem has always been with the previous government for failing to enforce the principles behind LVCR and letting things become so skewed that eventually no one in the Treasury actually understood where the term originated or what it represented.

    Things aren’t over just yet however I would say that for so many of our competitors that until recently used to be based on the mainland, perhaps it’s time to return home.

    Chris Holgate
    Director of Refresh Cartridges and RAVAS member

  6. Chris that’s right and your moral stance on this is inspiring. Nobody can blame business for taking advantage of LVCR if they have been allowed to do so, but the stupidity of Gordon Brown in failing to prevent this abuse before it got out of hand is staggering. If anyone is to blame its the previous Government for not taking a clear, moral stance on a completely unfair and unjustifiable abuse of the tax system.

  7. Finally someone actually talks a little more sense, you are finally not blaming the offshore retailers but you are blaming the government!! well thank you very much, is appreciated!

    as you say business is business, lvcr or no lvcr business will continue, noone will complain offshore they will just get on with what they are good at! as for new sprouting companies in the UK well it will be interesting to keep a close eye on who and what ‘sprouts’ up, I bet ya bottom dollar that anyone with a failed business in this RAVAS group still wont suceed! good luck to everyone tho, level playing fields here we ‘possibly’ come! im sure we can all be friends! 🙂

    oh and as for play.com being sold for a snippet, £500m per year annual turnover, highly possible that they have been running at 1% profit, nice £5m profit per year im sure they wouldnt have sniffed at…average business sale price is worked out of 5 times annual profit gets you £25m – job done

    this isnt because its all been about LVCR for them, yes no doubt LVCR has helped them grow, but with a level playing field I challenge any of you lot to ‘sprout’ your business and run on a 1% profit margin, again no loss for an offshore business just a loss for the everyday consumer, prices will have to rise for everyone and business will indeed be business! 🙂

    • Jon, good to see that RAVAS let this one through just so people can see your arrogance. There are people in this group based on the UK mainland who have multi million pound turnovers but, strange as it may seem to you, they also understand when something is morally repugnant. It may also seem incredible to you that employers in the UK care about their staff and rather than lay them off and ship off to warmer pastures they joined RAVAS to end an abusive trade. Good luck running a business on the other side of the Channel. Hope it’s not too foggy.

  8. I was actually trying to not come across as being arrogant with that message for a change. my point of that message was to actually praise the fact that I am pleased to see someone has said that Jersey businesses arent to blame and that its the government they blame! I did go on a small rant I can see, that wasnt actually the main point of my post.

    As Chris pointed out, business is business and as you point out there are UK companies that have multimillion pound turnovers so it seems LCVR doesnt effect everyone! there are also businesses in the Channel Islands that startup and fail so again it seems again LVCR doesnt help everyone even from over here!

    not foggy at all , the sun is shining, the beaches are lovely and working in the quiet country side is just to die for, maybe you should try it!! 🙂

    • Jon, we think you may have confused some postings with the thinking behind this site. If you read the overview section then paragraph one says ” This site is run and supported by a collective of UK mainland based retailers (both traditional and online) who have decided to create RAVAS (Retailers Against VAT Avoidance Schemes) in reaction to the fact that the UK Government has failed to prevent the industrial exploitation of an EU import VAT relief called LVCR” and later “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”

      If we get a level playing field then we are all happy.

      • OK RAVAS yes I have read that just as i have read most of the site….maybe I am just being a little hmm i dont know, paranoid as there have been so many comments pointed towards the Channel Islands and also as your heading states:

        A resource for those interested in or affected by VAT free mail order from Jersey and Guernsey

        I dont see Switzerland included in that or any other places, that is pointing it direct to Jersey and Guernsey!

        anyway yes if and when there is a level playing field I wouldnt say may the best man win I would say business goes on lets let business be business – fair to say?

        • By far the bulk of this trade is from CI. Most distributors in UK would not supply a non UK location in another territory. And in any case if its an abuse from CI to circular ship its an abuse in Switzerland.

  9. Can I just add…are we all agreed Gordon Brown was an idiot?

  10. Anyone in the Channel Islands who needs to move their fulfilment to the UK mainland once LVCR is gone should check out this link …

    http://www.mcvuk.com/news/read/skream-offers-white-label-ecommerce-service/085330

    • Impressed with taking the opportunity to advertise!! I am unsure why tho you all seem to think that once LVCR has gone the business will NEED to move their fulfilment? Who is to say fulfilment cannot be done from Jersey or Guernsey? I think you will find that our fulfilment rates are cheaper than the UK, our facilities are more secure, we get overnight delivery of goods to the islands and our postal service in conjunction with Royal Mail ensures that most packages are delivered within 2-3 business days for the same prices that you pay in the UK. Oh and not forgetting also we have ZERO corporation tax over here so there is another plus for running ‘Multimillion pound business from Jersey! so there you see even without LCVR there still will never be a complete level playing field.

  11. I have no doubt about it, fulfilment and online businesses will survive in the Channel Islands without LVCR, im not saying it will be as easy as it is with LVCR but it will survive, as said before time and time again, the consumer will be at a loss as the prices will indeed rise, HMRC will be of a gain but again thats not really that much use to the consumer or you, competition will be higher but then whos afraid of a little competition, thats what life and business is all about, one thing for sure in all this is Amazon wont even feel a thing over the effect of LVCR in the grand scheme of things, if you want to blame anyone for the loss of other businesses then Amazon is where to look they will continue to grow and continue to put others out of business LVCR or no LVCR. As for stormy seas, well these days that doesnt really effect cargo boats that much if at all and in the event that it does guess what, we fly the post! 🙂 as for the financials….zero corporation tax against 25%..hmm i dont think I need to point out the obvious, makes it all quite convenient if you ask me!

    anyway..aside from all this I do feel that this thread and our conversations have been somewhat a little more positive than usual, that makes me happy 🙂

  12. Well once the LVCR prop has gone from the local economy you might start having to put taxes up!

  13. … you don’t think they are selling up because they know people aren’t buying physical CD’s, games and films now? They are downloading them. And this trend is increasing at an alarming rate!

    This site is just mindless propaganda.

    Can’t wait for the negative knock on effect for this – higher prices, longer delivery times, sellers turning their back and selling to Europe instead. Oh and the massive bill for checking all this mail. Oh 1,000’s of people in Jersey without jobs.

    Well done.

    • If you actually read the post you will see its not just CDs and DVDs so your point is not made. Many other items go through this arrangement from flowers through gifts to cosmetics. All we want is a level playing field. How is that ‘mindless propaganda’ ?

    • I don’t understand what you mean Chris – longer delivery times for whom? UK mainland consumers won’t be able to buy VAT-free from Channal Islands companies, so presumably this will mean that mainland ecommerce websites will see sales increase. In turn, if more stuff is shipped from mainland websites, delivery times to the UK mainland will drop quite considerably.

      Of course, the move towards downloads will have a negative effect on sales for ecommerce websites in the entertainment sector, but that is not the only reason why Channel Islands companies are selling up. It seems likely that the Chancellor’s recent moves against LVCR have had an effect.

      What do you mean by “sellers turning their back and selling to Europe instead”? And what massive bill?

  14. Hi …we are ready to ship from CH(Swiss). As fast as they close that loophole another opens. This is funny, why is no one talking about Gibraltar …they are in the EEC. No VAT there…If you wanna stop the CD/DVD market…take on Apple…pfff good luck.

    • The costs of shipping from CH (Swiss)only make sense if you are bringing in Far East products which could come in direct from China anyhow (for anyone who wants that stuff) .Its utterly useless for circular shipping from the UK as the costs are too high and the lead times too long.

  15. More sour grapes. Well you’ll need good luck because the EU are looking at that one too… don’t spend too much setting up!

  16. Sour Grapes…don’t think so…the only sour grapes here are the people who are upset at Apple who have wiped out the need for CD’s. In fact its good for the environment that digital is here. The bigger picture is China…maybe the UK should get back to work instead of moaning about unfair this and unfair that…China is loving this, and the own us and the USA.

    So if the little C.I. are now out..who are you going to blame now…I hope its China..because they simply won’t even care

  17. Cool bring the VAT into Jersey and Guernsey, I can’t wait to put all my VAT receipts and VAT refund requests in. Anything I buy for my company now I will get a refund…even my VAT on post Yipeeeee!!!!!

  18. …and you’ll have to charge it as well, like we do …Yippeeeee!

    • RAVAS, this whole situation has fired me and the rest of us to make sure that we survive, and survive we will.

      It is all about products, price and customer service, and the only people that will suffer in the UK are the consumers, so I’m sure they will be delighted with the job you have done on their behalf!

      Well done!

  19. I’m starting to think that all the LVCR supporters on here are obsessed with CD’s and DVD’s. There are so many other industries affected by this – as you well know.

    • The reason they keep mentioning it is because their bizarre argument goes something like this ; CDs and DVDs don’t sell and everything is now a digital download (not true anyhow) so that makes LVCR abuse legitimate because we are all out of business ? ! Last time I looked you couldn’t download a bunch of flowers, memory card, a lipstick or an ink cartridge but you could buy them VAT free from the Channel Islands.

  20. Glad to know all you boys grow flowers. Dust off your Vinyl you still may be able to get something for it. Regarding Memory Cards..looks like Apple sorted that with the Cloud.

    And the saga continues…

  21. Get use to this number over the Christmas season £14.99

  22. Which Christmas would that be ? Our Christmas may come early on 6th December…. .What difference does another Xmas of this nonsense make anyhow ? We’ve had 15 already. We can wait. You may need to get used to the inconvenience of being in the expensive and inconvenient CI with no VAT advantage soon. Factor that one into your price.

  23. I say again….CI, not expensive, actually cheaper fulfilment rates than the whole of the UK, also not inconvenient, we have brilliant delivery times, great freight and air links….hmmm no LVCR VAT advantage maybe but then we do have a 0% corporation tax advantage.. Factor that into your price.

    Oh and you can go sit down the beach for lunch and have a nice pint without some chav bugging you!! 🙂

  24. I doubt there will be any concrete announcement on Dec 6th. And if there is there will a long time before anything new comes into action.

    Most online retailers are based in the UK (excluding CDs and DVDs) so dont expect prices to take a jump. If your not making money now LCVR should be the least of your worries!

    • You clearly didn’t read the last budget! 20% advantage not a major issue ? Of course not…. Bucket, head, sand.

      • Well you clearly haven’t been taking anything said here into consideration. Its not as simple as 20%. Wages, rent and both outgoing and incoming postage costs are much higher in the Channel Islands.

        Reducing LVCR to 0 would not be a level playing field. Perhaps £6-8 but that’s for an economist to answer. It would be enough for the big players including Amazon, Tesco’s and ASDA etc to move their dispatch to the UK. This would give small local companies the chance to continue trading since they can’t afford the move.

        It’s not a war Mr C. Jobs and the well being of families are at stake here so a middle ground must be found.

        • No. A middle ground does not have to be found. Your point about rent, wages, incoming and outgoing shipping costs simply emphasises our case. You wouldn’t be doing this if it weren’t a tax evading scam. We want the smugglers out of business. End of. I don’t remember you calling for a middle ground and worrying about jobs in VAT paying businesses when setting up your industrial scale smuggling operation so don’t expect any tears now from those who have shouldered the burden of this for the past 15 years at least. You’ve been kicking us for years so please understand we just don’t care about your problems.

        • Yes…so what if the removal of LVCR exposes you to the reality of higher costs. Every location has difficulties. I’m in Scotland and we don’t get a VAT advantage yet we’ve suffered this tax scam for years. What nonsense. Welcome to the real world.

          • I work in a small company (10 people) selling electronic accessories. All the shareholders and directors are local and was started here in 2008. There is no smuggling or VAT avoidance happening Ken, we live here and this is where the business had to be started.

            I repeat my original point: Most online retailers are based in the UK. Hard to argue with that one. If we had started in the UK we would be exactly where we are now. The reason we have survived and done well is because of the decisions we have taken. Many local companies have gone out of business, it’s not a money printing scam as you are suggesting.

            Barring CD’s and DVD’s (which is a tiny amount of online sales) the argument of market distortion falls apart. Tesco’s and ASDA constantly sell CDs & DVDs as loss leaders in their stores, you don’t think this is having a bigger effect on the market?

            If we are pushed into a corner and forced to move distribution we will do so as one organised unit. We will have bigger postage power than CitiLink and we will use it. If you think some of the best minds in the business will give up because of some bumps in the road you are sadly mistaken.

  25. This is all very interesting but you shouldn’t have a tax advantage. Period. If your business is good then great. If it survives on a VAT advantage then it isn’t a viable business. Why should we have to suffer your pricing advantage and also the VAT loss to the UK ? In any case LVCR was never intended to give you an advantage. Read Osborne budget speech. LVCR is not intended to do what you say it’s supposed to do, i.e. support your business. Nowhere in EU legislation does it say that.

    • It doesn’t just survive on a VAT advantage, that is my whole point! We are happy to play on a level field.

      The total removal of LVCR as a sole and only action is totally irresponsible. The people who seek this are either highly misinformed or seek some kind of retribution. Inattentive or revengeful, in this case they are not so different.

      The anger and blame should be on the UK government. They let this happen and because of it we are all worse off, especially the consumer.

      • OK well if it doesn’t survive on a VAT advantage you don’t need LVCR then do you ? Why complain about it.

        • Re-read my previous post: October 20, 2011 at 1:53 pm

          • That’s not a good enough reason. Factors affect my business because of its location. I don’t expect to be able to avoid paying VAT because of those factors. Basically you are saying you’re a special case because of high rent etc. in the Channel Islands. Why ? In any case It’s Low Value Consignment Relief not Channel Island Relief.

        • So you have never utilised the UK Tax Rules to your advantage, like paying your spouse to lower the tax burden?

          Pot, Kettle, Black!!!

          As they say “don’t throw stones in a glass house!”

          • If was carrying out a similar scam to the LVCR abuse round tripping, I’d be getting married every week and divorced every week so I could pay money to a new spouse every week.

      • Sorry. It DOES just survive on a VAT advantage. The only reason you have a business is the VAT advantage – an anachronism in the tax law. I have been in my sector (not DVDs/CDs) for 20 years. I know my trade and I also know that the only reason we are being undercut is the VAT element. If you sell something at £16.00 I could sell it at £15.00 BUT I then have to add 20% to that and my price is £18.00. Customers just see the headline price and think you are cheap and I am expensive. So can you defend that? Of course you can’t. You are not some special genius business breed that is beyond our comprehension as you seem to think. You are simply sitting outside a country and abusing that country’s tax system. Now if you are saying that it is the UK government’s fault for permitting it I would agree with you. However that doesn’t justify it. Maybe just for once the UK government is about to astonish us all by putting its own people before those who would damage them.

        You have no VAT in CI. I have no problem with that. It’s up to the CIs. Supply your own territory without VAT that’s fine. If I supply goods to CI customers I deduct the VAT – a level playing field and guess what – in Jersey and Guernsey I can compete! There is no logical reason why you should have the advantage of also being able to supply into the VAT area without charging the tax but we can’t.

        By all means move your fulfilment to the UK. So long as you have to charge VAT you can do what you like, it’s a level playing field and we’re happy. As for the best business minds, haven’t they seen the writing on the wall and got out?

        Surely the apologists for this abomination don’t really believe the tosh they write in trying to justify it? You may as well argue that night is day or 2+3=5. Or if, as you say it isn’t an advantage, maybe £17.99 + 20% = £17.99 (+ carriage of course which could take it anywhere up to £39.99 for a jiffy bag and a stamp!). Chiseling gits the lot of you – big or small. Come on chaps. You’re bang to rights and you just don’t like it do you?

  26. Dave I agree with you 100%, I will not be closing my business down, so if the UK on-line retailers think we are going to go away then they are sadly mistaken.

    My business will survive, we have good buying power and therefore will be able to keep my costs down, of course some of our selling prices will have to rise, so the consumer is main party that will suffer.

    and “John Garn” I totally agree with your sentiments, so please stop moaning that the C.I. are the main cause of your businesses not doing well, its just total nonsense.

    • We don’t have an issue with The Channel Islands, just the people who defend this particular arrangement. We welcome competition on a level playing field.

      • We just want to find a middle ground to continue trading. Is there a need to go from one extreme to the other?

        The tax avoidance argument is silly. Everyone on the planet will pay as little tax as possible, this is nothing new or immoral.

        All the blame is on the UK government. It’s the rules of the game that are at fault, not the players. Since this was not corrected at an earlier stage the resulting fallout will be massive if not handled with some compassion.

        We all live in Great Britain, we all spend pound sterling and we all hate the X-Factor. Group hug?

        • Don’t recognise the sudden charm offensive from the VAT avoiders. Group hug? Now I wonder what brought that on. Very different tune from the “tough shit” attitude they have had to VAT paying businesses for at least 15 years – not a lot of compassion there. Yes, we all spend the pound sterling but it costs some of us £1.20. As for finding “middle ground” no problem – let’s all pay VAT or all pay none. Deal?

    • Not one business has been put out solely by LVCR, guaranteed. A business fails due to multiple factors.

      The main advantage of business here (Jersey) isn’t actually LVCR, it’s the levels of capital gains and income tax. Capital gains tax is….0%! Income tax is 20%, max, no more.

      I suppose if we move distribution to the UK you will then begin to use this to squabble? Don’t reply saying we should be paying more tax just because you want to pay less…

      I have a clear conscience since our business wasn’t MOVED here for tax reasons, it was started here because this is where we live. Our tax laws are much better than the UK and its nothing to be ashamed of.

      • Dave Quote : “The main advantage of business here (Jersey) isn’t actually LVCR, it’s the levels of capital gains and income tax. Capital gains tax is….0%! Income tax is 20%, max, no more”

        Right…and what’s that got to do with the price of fish ? That’s not our beef. Our beef is that you are selling in our country with no VAT whilst we have to charge VAT. That’s an end price issue not a profit margin issue. If we both pay the same price for an item (and I know we do so don’t give us that ‘bulk buying’ rubbish)then you are cheaper because of no VAT and other than join you in the CI we can’t compete. Kens right. You’d argue that black was white.

        Dave Quote “Not one business has been put out solely by LVCR, guaranteed. A business fails due to multiple factors.”

        Rubbish. Other than for vinyl, there are no online mail order retailers of music of any consequence in UK. They are all in CI. All the UK ones are gone. That’s because in music retail virtually all the products sold are below £18. And don’t give the standard download response. Mail order CD is still big business.

        Dave Quote ” I have a clear conscience since our business wasn’t MOVED here for tax reasons, it was started here because this is where we live. “

        So you are not pointlessly round tripping UK sourced products then ? Can you explain why you would add a pointless extra journey and additional transport costs, and also send orders for multiple items to customers individually that could have been posted together, if it wasn’t to avoid the VAT ? We’d all love to hear the explanation for that.

        • You make it sound like the big bad cats in the channel islands are killing online trade? With the example of CDs/DVDs all the players have just moved here right? So it’s not dead then…

          Your entire argument could be used to deal with some much bigger fish. How about Microsoft & Google all operating out of Ireland? They take all the profit from the UK and pump it in there. Billions my friends.

          £100m (if that’s the VAT loss figure) is pennies, literally nothing. It means NOTHING to the deficit and NOTHING to the UK economy. So that begs the question; Why are the politicians suddenly pursuing this? Is it because of an email to the EU? Do they simply want to be fair and good people? No chance, we all know politicians. 2015 is on the horizon, that’s the ONLY reason for it.

          • Why is this happening ? Well there is a very simple answer to that. The UK is in breach of EU law for allowing this, and due to a complaint submitted to the European Commission by RAVAS and the FPB the UK have been told to correct the situation. This story in 2007 obviously went unnoticed in the CI.

            http://www.thisisjersey.com/latest/2007/02/22/new-eu-probe-into-fulfilment/

            Read the law and you’ll see why. This ‘industry’ was doomed from the start. Also we think that George Osborne actually understands the issues here which are unfair competition and loss of VAT revenue. It may seem odd to you that we defend tax revenue but what do you think pays for our state education and National Health service ? 100 million is an entire hospital.

          • Oh…and make that closer to 200 million a year.

  27. Right if you CI lot are such great businessmen then you should know exactly what the Jersey Government said about LVCR shouldn’t you? I mean is it sensible to have a business reliant on a tax regime if you don’t know all the facts surrounding it? Surely you wouldn’t have just blindly rushed into the future without knowing that ?

    Well in case you don’t know the facts then here’s a quick rundown. Back in 2005 the Jersey Government commissioned a report by the respected research organisation Oxera. The remit was to find out why The Fulfilment Industry was in Jersey and what it’s impact was on the economy. Unsurprisingly the report came to the conclusion that the main reason there was a fulfilment industry in Jersey was because of LVCR. It also pointed out that Jersey as a fulfilment hub is pretty much useless for geographical reasons and that LVCR gave Jersey retailers a trading advantage over EU traders. Another issue highlighted was the fact that that LVCR was controlled by the EU/UK and not Jersey so basing an industry on it was just a little bit risky! It concluded that if LVCR was ever drastically changed the entire fulfilment industry would become unviable. Of course the Jersey Government really didn’t want to hear this having already encouraged the industry’s growth, so when they used the information from the Oxera report in their own report here :

    http://www.scrutiny.gov.je/documents/reports/38056-25369-30102006.htm

    they doctored it and glossed over the trading advantage and spewed out the same rubbish that you are posting about local costs such as labour, rent etc. They claimed that these higher costs offset the competitive advantage which is clearly not the case as local profit issues do not affect the end price. They only affect the profit margin. No matter what your local costs might be your price to the consumer is artificially low due to the absence of VAT. UK retailers can’t match it because they have to charge VAT even if they pay the same wholesale price (and they do pay the same wholesale price because I’ve faced MY OWN PRODUCTS coming back in VAT free so I know what CI retailers pay for them from my distributor) In any case you lot are in cloud cuckoo land if you think we don’t know what you pay for the stuff you sell because as you know much of it comes from the same distributors and suppliers! We know and you know it’s the VAT that’s giving you the ability to undercut us. The Jersey report also misquoted the key findings of the Oxera report saying that LVCR was only one of the reasons that fulfilment was in Jersey when the Oxera report said that the MAIN REASON fulfilment was in Jersey was LVCR. You should note that the Oxera report whilst listed as a public document on the Jersey Govt website is now coming up as a 404 unavailable page. I wonder why!!

    As for this idea that innocent retailers in the Channel Islands are oblivious to the suffering of UK retail, all I can say is you must live in a bubble. Every single third party fulfilment operator I have ever seen in the CI has openly advertised the fact that moving your fulfilment to the Channel Islands will give you a major trading advantage over UK based retailers due to LVCR. To try and claim that’s not what it’s all about is dishonest.

    If you really want to see what happens when a tax advantage disappears read this.

    http://www.amazon.co.uk/Secret-History-Guernsey-Marmalade-1857-1879/dp/0953254704

    No Marmalade industry in Guernsey anymore now that the sugar tax dodge is long gone… I can see fulfilment going the same way. A bit like the Saudi Arabian Ice Cream Export industry.

    Don’t blame us for wanting a level playing field. Look closer to home for the cause of your problems once this VAT abuse is ended.

  28. Well said Mr C. At last some reality. I don’t know whether these fellows are so seduced by this “business model” that they actually believe their own rhetoric or whether they are the best actors this side of Hollywood. The arrogance of “it’s because we are better businessmen than you” is breathtaking. We know all about the tax situation in different jurisdictions. We don’t have a problem with that. It’s the practice of taking the tax status of one place and applying it wholly unfairly in another place to the detriment of the indigenous business community in that place. By what God given right do you believe that you should be able to do this. George Osborne is right. You should not build a business on a kink in the tax system.

    • Right…. I think there’s also some confusion on their part as to what this website is about. We are not complaining about Channel Island retailers or their business. I personally wish them all the best with that and whilst jealous of the low tax regime I wouldn’t want to do anything to interfere with the set up of a business in another jurisdiction. What I am complaining about is ‘offshore fulfilment’ which is essentially the abuse of LVCR through circular shipping to gain an unfair advantage (as confirmed by both George Osborne and the EU). Yes you can run a business from Jersey and take advantage of local tax regimes but there is no reason you would fulfil any UK sourced products from Jersey and Guernsey other than because of this nonsense. You’d use fulfilment in the UK in a much more convenient location. Other than the VAT advantage fulfilment is actually more expensive in Jersey and Guernsey due to labour costs and warehouse rents and of course the pointless trip to the Islands in the first place. If most of your customers are in the UK there is absolutely no point taking goods into Jersey or Guernsey to only send them back again. You would only do that to take advantage of VAT…and 20% is a significant advantage. Its a whole margin!

      Here’s a quote that for many years was on the website of a well known Jersey Fulfilment Company

      “Could you utilise a saving of up to £3.15 per consignment and spend it on Marketing, reduced Sales Costs or offering free postage ? VAT free on every package where the contents value is under £18!

      and on the http://www.Jerseypostlogistics.com website (now mysteriously disappeared) it said

      “The emergence of e-commerce transformed the potential for growth in this area and added huge impetus to those companies that can take advantage of the European Commission ruling that allows goods worth less than £18 (€22) to be imported into the EU free of VAT”

      So yes by all means run a business from Jersey or Guernsey but don’t pretend the avoidance of VAT is not giving you an advantage. It just makes you look ridiculous.

  29. Wouldn’t we just? Dave didn’t need to move for tax reasons. The tax reasons were already there! Dave is right in as far as he didn’t make the system. He did however take advantage of it and he should not be surprised and cry foul because we want it stopped. Some of the operators in CI try to claim they are not round shipping UK sourced goods but we know this is a fantasy as the manufacturers/suppliers with whom we have relationships openly tell us as much.

  30. OK We have had a few comments here from both sides of the argument that have got a bit too personal so we have removed them.Please try not to make personal comments or we will have to remove them! Thanks.

  31. Mr C Quote “Other than the VAT advantage fulfilment is actually more expensive in Jersey and Guernsey due to labour costs and warehouse rents and of course the pointless trip to the Islands in the first place.”

    Can we have your figures on this comment please as I am not sure fulfilment in the CI is actually more expensive, I think you will find its cheaper!

    • Well it hardly takes a genius to work out it must be more expensive to fulfil an order from an Island on the other side of the Channel where space is limited and labour costs are higher and ferry journeys are required in both directions but in any case if you want the facts they are detailed in the Oxera report here….

      http://www.scrutiny.gov.je/reviewlinks.asp?reviewid=34

      But it looks like nobody wants you to see that.

      I have a copy.

      • Well given I know the costs of fulfilment from Jersey and I know first hand that they compare alot cheaper than the UK i beg to differ on your argument. I also happen to know the exact costs of labour and warehouse costs, and also ferry costs dont come into it as delivery to Jersey is free from suppliers, postal costs are the same as Royal Mail charges that you get!

        • I’m sure you wouldn’t agree. Who cares anyhow. The reality will dictate the situation when LVCR abuse ends.

          • i dont agree Mr C because the reality to this particular comment is that fulfilment costs from Jersey are not more expensive than the UK, this has nothing to do with LVCR so yes who cares anyway, i was merely pointing out that on this comment you were factually incorrect. end of!

  32. Can someone shed some light on what they think is going to happen with the VAT collection if LVCR is binned all together?

    I am sure that this has been covered but I cant remember on which posting. Bear in mind obviously that the current MOU Scheme is a voluntry scheme run by Jersey Post at no charge to the UK government so this scheme no doubt will also be binned.

    I am not going to cast any opinion myself at this time as I will no doubt just be shouted back down! but please feel free to fire away, I am sure us Channel Islanders value your thoughts more than you value ours!

    Off to the beach now as the sun is out, just checked my orders they are flying in as usual but no need to hang about at my PC when the beach is calling me so I will check back later!! 🙂

    • All the VAT will be prepaid like it was from 1973 to 1983. Yes its voluntary because the Channel Islands asked for it. If you decide to bin the arrangement your mail is randomly checked (like all other mail entering the UK) and chunks of it get stuck in a customs warehouse pending clearance and extra handling charges. HMRC no longer handle customs collection on post. Royal mail would love the extra work! You’d then lose all your customers since nobody would buy anything from a CI mail order company due to the inconvenience. I assume you don’t want to have a war with the UK using your customers orders as ammunition ? Seems to me it would be very stupid to ditch the MoU, very stupid indeed.

      • Yes. Would operate just as from any other territory in the world. However, special attention would no doubt be applied if large volumes of jiffy bags are arriving from a VAT free area. It would soon be apparent if anyone were flouting the regulations.

        • Yes exactly Ken. Come on guys. Nobody noticed a few contact lenses plant pots and flowers secretly doing the rounds but when you had the likes of Play.com and Healthspan doing TV advertising campaigns, full page print media adverts and 15ft high advertising hoardings in London things became just a little blatant!

        • Sadly I think the Jiffy bag industry may see a sudden fall in demand. No need to send 10 items individually when they can go in one pack.

          • Thanks for your thoughts, they are exactly as I thought they would be! randomly checking im sure would work, but then that would mean millions would be lost in VAT payments from the packages that get through VAT free, and checking every package would be interesting im sure, RM would have a melt down and would need extra premises and god knows how many more staff to process every package! but its all good to look forward to and see what unfolds!

          • Jon, the UK has always randomly checked mail from all destinations and no post office in the world checks every item apart from totalitarian states. This is another myth used to support LVCR abuse. It would be physically impossible to check every package. However most people who order from the CI assume they are ordering within the UK . As soon as they get a customs charge and handling charge they won’t order again even if they only got it on one out of three orders. Its not just a method of collecting VAT its a deterrent. The argument that collecting VAT is expensive conveniently ignores the fact that the abuse of LVCR is leading to extra lost VAT that wouldn’t be lost if the abuse was ended. You are also failing to mention the fact that there are other advantages to being part of the MoU which you would lose such as cheaper postal rates and faster transit. Without the MoU there is no CI mail order. MoU arrangements exist from other destinations into the UK but they are only granted if the senders play ball. If they don’t their customers are at the mercy of customs charges. That’s the whole point of it.

  33. We left Jersey months ago, our post times from Swiss, Gibraltar are making it to the UK actually faster then posting items within the UK, We have also been approached from Isle of Man as well.

    I was surprised that the monitor of this website did not approve some very important concerns I had. Seems this may been seen as one sided, have I been censored ?

    • Jon we don’t know what you are shipping but if you are circular shipping UK/EU products via these locations (the only issue this website is concerned with) then that’s still abusive and we don’t believe its either cost efficient or logistically viable for most people. We have very good contacts in Switzerland and they tell us the advantages of circular shipping are seriously reduced if not completely negated into the UK.

      If your concerns are about abusive postings we remove anything that’s abusive and if you have concerns about any particular posting, let us know and we will remove it if we feel your complaint is justified. We regularly get abusive correspondence from pro LVCR campaigners some of it is directed at named individuals. This is unsurprisingly a controversial subject.

  34. RAVAS Quote: Jon, the UK has always randomly checked mail from all destinations and no post office in the world checks every item apart from totalitarian states. This is another myth used to support LVCR abuse. It would be physically impossible to check every package. However most people who order from the CI assume they are ordering within the UK . As soon as they get a customs charge and handling charge they won’t order again even if they only got it on one out of three orders. Its not just a method of collecting VAT its a deterrent. The argument that collecting VAT is expensive conveniently ignores the fact that the abuse of LVCR is leading to extra lost VAT that wouldn’t be lost if the abuse was ended. You are also failing to mention the fact that there are other advantages to being part of the MoU which you would lose such as cheaper postal rates and faster transit. Without the MoU there is no CI mail order. MoU arrangements exist from other destinations into the UK but they are only granted if the senders play ball. If they don’t their customers are at the mercy of customs charges. That’s the whole point of it.

    I am not arguing against this, tis why i say it will be interesting to see what unfolds and IF they put a total ban on LVCR as they know what hassle it will bring them.

    • But there won’t be any ‘hassle’ . All VAT will be prepaid because nobody in their right mind would not send it through the MoU unless they wanted to just prove a point at the expense of a customer. Is that what you are planning to do ?

      • Not if the MOU still exists, nobody knows if Jersey Post will continue to run the scheme! Its all a bit of an open book right now isnt it?

      • IF they remove the use of LVCR completely and there is such a downturn in business as you all seem to think then why would Jersey Post want to run a scheme that helps HMRC out for collection VAT? Surely if HMRC want to collect VAT from the CI then that should and would have to be a job for them to do?! but before you reply with the standard reply as above, I do get your point, this is merely a discussion not an argument!

        • Well that all depends on whether you think the MoU is for the convenience of the CI or the UK. Since the CI specifically requested it then we’d say the former. But as you say, we’ll see what happens.

          • HMRC just pay Jersey Post part of the VAT to administer the scheme exactly as they currently pay Royal Mail to collect VAT. Job done. I’m sure Jersey Post will need the money! As RAVAS say the alternative (i.e no MoU) makes mail order unworkable from CI.

          • Im sure CI did specifically request the scheme as it is convenient but at what stage was this requested, no doubt when the volume of packages was nowhere near what it is today, so I would assume (and im being honest here as i am assuming before everying gives me grief saying i dont know what im talking about) that in todays day the MOU scheme is just as convenient for the UK as it is for Jersey. If Jersey Post pull that scheme, which again is a very large assumption that they may do, who knows…then the inconveniece im sure will lay with UK just as much if not more that with Jersey. I cant see HMRC paying a Jersey postal company just as they do a UK postal company to get a job done on their behalf!

          • This is a very enjoyable discussion. Well you’d be right. Volumes then were tiny but that’s because it wasn’t bulked out with vast amounts of stuff avoiding VAT! Circular shipping was initially a little known scheme that started off small scale and grew rapidly. Interestingly a report by HMRC from 1997 reaches the conclusion that circular shipping wouldn’t be viable …even though it was already going on!! We are pretty sure that most of the stuff coming from the CI is circular shipped including virtually all the plants and flowers (we have reams of data on Horticulture supplied by a member of RAVAS…I think even CI residents would be gobsmacked as to what’s been going on there! ) . Frankly our view would be that HMRC should pay to keep the MoU going since they are largely responsible for this mess! Certainly someone should pay and we haven’t noticed the UK authorities making a fuss about this issue until we brought it to their attention via the EU! Can Jersey companies legitimately complain that they were allowed to do this and may soon have to stop ? Yes. Can they claim they didn’t know it involved avoiding VAT. No.

  35. RAVAS , i cant reply to your last post , not sure why. So you think HMRC should keep the MoU going which is probably the right thing for them to do. Will be interesting to see what happens with it! Case closed for now on this subject, its nice to see that us CI traders can have a simple discussion with you guys sometimes! 🙂

    • We don’t have anything against businesses in the CI. We just have an issue with this stupid arrangement which was put in place by the powers that be, wherever they may reside. I’m sure you’d feel the same if you were on this side of the pond. 🙂

      • Agreed no doubt i would, but im not on that side of the pond, the ‘loophole’ itself has been exactly that a ‘loophole’ if it has been a benefit ‘loophole’ for your side of the water can you honestly say here and now 100% put your hand up and declare that you wouldnt have used such a ‘loophole’?

        The issues we have had with this whole website and most of the discusssions and assuptions claim that we are all crooks carrying out a business based on vat avoidance that we knew and had indepth knowlege of, i think you will find that this is not the case for the majority!

        • RAVAS has never made any generalisations about Channel Islands business or if it has that wasn’t the intention (and if you point them out we will correct them) . It has only attacked the mechanics of a practice that has been particularly prevalent in the CI. The website is very clear on this. Secondly ‘loophole’ suggests a legal practice. This has never been legal. Whilst its been ‘allowed’ we agree that might have confused the issue but its never been legal as a read of the relevant law will reveal. We have done everything we can to explain that on the site and if you look back we were ‘mocked’ for suggesting such a thing. Your moral conundrum is noted and none of us put ourselves forward as saints. We have seen Channel Islanders attack this industry as a tax avoidance arrangement and we hope people would take a similar view if it was taking place here. Moral view or not the use of LVCR was never going to be a sound foundation for a business and George Osborne’s view that building a business on a kink in the tax system is not a good idea is pretty much spot on.

          • fair response, i dont think the generalisations were particularly from RAVAS but from other postings of general people, but anyway…fine move on. Building a businesses on a kink in the tax system is not a good idea i agree, but again George Osborne and all of you are making the assumption that every CI online business is build on a kink in the tax system, this assumption i feel is unfair, none of you know anything about our businesses, you dont know our margins and profits so this you cannot nor can Mr Osborne pass comment on….a kink in the tax system may have been used but that is not to say our business is built on that kink….we will continue without any issue i can assure you.

        • Please also note this from ‘The Abuse of LVCR’ section at the top of this page. We think we made our position very clear from the start :

          NOTE TO CHANNEL ISLAND RETAILERS

          This website has received some fairly angry emails from Channel Island retailers stating that the fact they have been allowed to continue exploiting LVCR indicates it must be a legal practice, and our website is scaremongering. Our high quality legal advice clearly indicates that, for the reasons previously stated, the practice of circular shipping goods via a non EU location to exploit LVCR is not legal under EU law. We would however totally agree that if retailers have been allowed to continue trading in this manner by the UK authorities, they can’t be held entirely responsible particularly if they have been forced to locate offshore in order to remain competitive in a hugely distorted market that’s resulted from their negligent inaction. That is an issue that individual retailers would have to take up with the UK Authorities and the EU Commission if the practice is confirmed abusive. If you have concerns about this issue please contact us via the contact form in the ‘What Can Be Done ? ‘ section of this site .

  36. For genuine CI companies that have been setup by local people can you explain how you think we should go about our business of online retail without making use of what you call ‘Circular Shipping’ as our suppliers are UK based?

    should we only use a fulfilment company in the UK and not hold our own stock in our own warehouse here?

    • Yes, very simple. Whether you hold stuff in the Islands or use UK fulfilment is up to you but Circular shipping is the practice of sending goods out of the EU and back in again to gain a tax advantage. I know you say you are getting a tax advantage ‘by accident’ but LVCR should never have been applied to the Channel Islands as an administrative relief in the first place. Its supposed to relieve tax collection costs where they exist, but because of the MoU (introduced in 1973) there was nothing to relieve. Think about it. All VAT was collected already. We don’t want to encourage conspiracy theories but something about the application of LVCR on top of the MoU smacks of deliberate.

      • Ahh ok I get it, so I can’t be guilty of Circular Shipping then as I am ordering from my UK suppliers and having them send to me in Jersey and then selling worldwide online (which obviously includes mainly UK market) but not for a tax advantage, purely to make a living and run the business that I have a interest in like many other online retailers, I know I can run that online business with or without LVCR!

        I am glad we have ironed that one out as I thought you guys were thinking someone like me was guilty of circular shipping! phew!

        • Yes if your comments that you are holding goods in Jersey and fulfilling them from Jersey because its cheaper than doing it in the UK are true. Maybe that is true but we suspect that much of the logistical cost savings are as a result of the growth of the massive trade that is, hopefully, shortly to be ended! Without high volumes we suspect that it won’t be quite so cheap.

          • If it is shipped from the UK and back to the UK it is circular shipping which strips out the VAT is it not?

            Jon, if you can run without LVCR just like us then great. That’s all we are after – a level playing field. I have seen so many comments now along the lines that LVCR is not a defining aspect of fulfillment from CI that I am wondering why there is such a row to hold on to it.

          • Its not going to stop the volumes however, its just going to give more money to HMRC!!

          • It may seem odd to someone from the Channel Islands but we don’t have an issue with tax going to the state if they use it to pay for services or to pay off the defecit.

          • “Circular shipping is the practice of sending goods out of the EU and back in again to gain a tax advantage”

            Ken, I agree with this point RAVAS has made. You cant call running a legitimate business from Jersey being guilty of circular shipping, as I was born here, have lived here all my life and just want to run an online business like anyone else wants to, we order stock, hold it in our warehouse, sell online and dispatch orders to our customers to make a living, not to solely gain a tax advantage.

          • RAVAS – October 24, 2011 at 8:43 am
            It may seem odd to someone from the Channel Islands but we don’t have an issue with tax going to the state if they use it to pay for services or to pay off the defecit.

            Thats understandable wanting to fight for your state, maybe you should stand for the government!! We thought this was all about Jersey taking over all the UK business and we were being blamed for the failings of the UK online industry!! fighting for your country is a different matter! 🙂

          • Well we agree on something!

  37. I have read the article and I promise we in the CI know more about the progress of this right now than anyone apart from HMRC and the Treasury themselves.

    The reason the whole argument blows apart is because its targeted at the CI. What about all the other jurisdictions? Politics.

    One hospital out of 168 trusts? Know what one trust encompasses? Pennies!

    • Its targeted at the CI because it’s totally abusive and completely out of control. The EU described this as an abuse and a restraint of trade, which is exactly what it is. We can only repeat, without LVCR why would anyone (other that local business producing local goods) consider fulfilment from Islands away from the mainland ? We don’t see fulfilment industries on any other Islands off the UK coast. We are sure the costs are low now…that’s because the whole thing has been industrialised but take away the huge volume of circular shipped trade which supports that infrastructure and what you are left with clearly wouldn’t be viable. It would be cheaper to use a warehouse in Manchester.

    • So what do you suggest. Dump the VAT and allow your business to profit instead ?

  38. Thanks for deleting my reply RAVAS, arguments usually fall the way you want them if you can photoshop the words……

    • We delete anything that could be construed as offensive. You’ll note we also deleted an anti-LVCR posting connected to yours because that was also getting too personal. If you really feel strongly about this why not start your own pro-LVCR fulfilment website ? This website is dedicated to ending the abuse of LVCR so it really should be no surprise to you what are views are!

  39. There are quite a lot of pro “LVCR” comments to the effect that “The loophole exists and you can’t blame us for using it” Whilst I have some sympathy with that – particularly if you were forced offshore by the unfair competition – it doesn’t mean that it is fair and should continue. Nobody has answered the critical bone of contention which is “Why should VAT paying businesses be at a 20% disadvantage IN THEIR OWN COUNTRY to outside operators who are sending goods in. There isn’t really an answer to that that stands scrutiny. Plenty of waffle about international trade but no real answer. Taxes/duties should be at least equal or if anything favour the home trade.

    It has been stated that it shouldn’t matter because £100-200 million (or more I suspect) is pretty much a drop in the bucket. Well if you have been following the cuts in the UK, in many cases they come down to just a few thousand pounds and they are being taken from services infinitely more worthwhile than the continuance of LVCR.

    It has been said by some that volumes from the CI will be maintained. I’m not sure how that will be with a 20% (or thereabouts) price increase. We’ll have to wait and see.

    Over the weekend somebody opined that 6000 CI based operators under the VAT threshold could take up the slack. Well that’s just not going to happen is it because most people don’t have the aptitude or the inclination to run a business. Unless of course we are envisaging a centrally controlled nameplate operation which would be clearly abusive and difficult to administer.

    Another point that was made was that things could just go on as before without VAT. Quite easy to sort that one too. Any website with prices that are clearly with zero VAT would be very easy to spot. 20% price discount in businesses with 5% margin or less is not easy to hide. Also quite sure that the UK would soon lean on Jersey/Guernsey to sort it and in the final analysis the UK is the metropolitan authority over the CIs.

    • Quote Ken: Another point that was made was that things could just go on as before without VAT. Quite easy to sort that one too. Any website with prices that are clearly with zero VAT would be very easy to spot. 20% price discount in businesses with 5% margin or less is not easy to hide. Also quite sure that the UK would soon lean on Jersey/Guernsey to sort it and in the final analysis the UK is the metropolitan authority over the CIs.

      Firstly you talk like the government really will care that much of what goes on with online sales, profits and margins of CI companies once they make their final change to LVCR, I doubt that very much I fear the only people that will have the CI’s under the spotlight will be the RAVAS group and you! and ….

      ‘in the final analysis the UK is the metropolitan authority over the CIs’

      wtf are you talking about, the UK has no metropolitan authority over the CI’s unless you would like to explain this phrase further to clarify?

      • Jon,

        Where you say that the only people that will have the CIs under the spotlight will be RAVAS it sounds very much as though you intend to flout the law. I hope that is not true.

        As for explaining the metropolitan authority of the UK over the CIs well I could quote chapter and verse constitutionally but what it boils down to is that the Islands are not sovereign states and the UK retains reserve powers over them. When the UK says jump they have to jump which invariably they do. If they don’t the UK will legislate for them and apply it to them by order in council. Will that do for now?

        • Kev: Thanks for the clarification. Whilst the UK has certain theoretical rights over the Channel Islands in practice these are archaic and meaningless much in the same way as the Queen, theoretically, could withhold royal assent to legislation she did not agree with or the constitutional obligation the UK has in maintaining the military defence of the islands which it has never taken seriously. If the UK did attempt to exercise any constitutional power unreasonably, each Island would simply vote for full independence. As several leading Jersey politicians have raised the issue of independence, it is likely to be considered in the near future in any case.

          • Jon,

            Yes, the Islands could have a referendum on independence and the UK would respect the result.

            However, in practice the Islands know that it’s cold outside and you will find that things are never allowed to come to a head. The UK says how it will be behind closed doors and the Islands invariably change their tune to chime in with the UK line and agreement “after negotiations” with the UK is announced. A current example is the very different line now being taken by Philip Ozouf of Jersey that Jersey must develop new innovative business sectors that respect the level playing field. Strange that he should say that against the current background and it doesn’t sound as though Jersey is prepared to die in a ditch over issues such as this.

        • Ken, I did reply to your post but it seems RAVAS have not allowed it, not sure why as it was personal or offensive in any way?!

  40. Im really starting to enjoy the discussions on this site (for a change) find it remarkable how everyone is suddenly a pro on the indepth knowledge of anything to do with the UK and the CI!!

    To be fair the amount of people in the UK that could stand up and say they dont even have a clue where the Channel Islands reside is quite amazing!

    • Jon,

      In view of your earlier comment that the UK has no authority over the CIs you are clearly no expert. However, I agree with your second assertion that many people have no idea where the CIs are but then this is a sad commentary on the general level of awareness of the public. A good proportion of them haven’t a clue where major British cities are let alone a collection of Islands in the Channel.

  41. Question, if they are making Jersey companies pay VAT, then I guess our company can now use all our invoices etc that we pay VAT on. This will be great, I have an entire file cabinet of VAT invoices I paid in the UK. One other question is VAT paid on Royal Mail in the UK if your a company ?

    So I look forward for to having the VAT people visit us on the island. This is actually exciting news now that I think about it. Looking forward to answers to my questions.

    1. Is Vat charged on Post when shipping to customers.
    2. Will Jersey and Guernsey now be able to put in for VAT refunds.
    3. Is it possible to be reimbursed for all VAT pay company connected.

    One other comment that just came to mind, the UK companies that ship goods to Jersey and Guernsey….won’t they be expecting layoffs. The C.I. may be effected , but so will the UK mainland.

    • Jon Garn:

      1. Royal Mail is VAT free. As are Jersey Post. Closing down LVCR Abuse won’t change this so you still won’t be able to claim back VAT but you won’t be charged it.

      2. If buying from the UK you can claim the VAT back anyway. We often ship out goods to customers who are in Jersey and Guernsey without charging VAT. I don’t believe this will change as the goods are leaving the UK, not entering it.

      3. I’m sorry but would you mind rephrasing this point. By ‘all VAT pay company connected’ are you talking about VAT that you may incur buying from UK registered companies (in which case see point 2) or the VAT that will be charged to customers of yours in the UK. In the case of the latter then, no, you can’t claim it back as you’ll have to charge VAT to your customers when shipping to the UK mainland and as such you’re only collecting the VAT on their behalf. It’s not your money to ‘claim back’.

      As a UK company who ships goods to Jersey and Guernsey I can guarantee that once this is closed we will be recruiting, not laying off. I don’t think a single UK company will be upset to see this vanish in to the history books.

      • Chris, I may have to correct you on this, but HMRC actually make Jersey Co. pay VAT on postage.

        On the monthly VAT report any items over £18 we pay VAT also VAT on the postage cost. So correct me if I am wrong but it seems to me that the UK sellers have an unfair advantage here.

        Our company is being charged VAT on our post if items are £18 and over, and has been for some time. So it seems to me this will be refunded. If not then the focus is now turning on unfair advantages.

        Anyone wish to clarify this, now that I know this has been confirmed by Chris I am on the phone to HMRC tomorrow , this will be massive help for Jersey and Guernsey sellers.

        I appreciate your input.

        • I’m afraid that I wouldn’t rely on my advice to confirm or deny anything; I am a UK shopkeeper and was trying to impart my experience of UK VAT laws.

          The majority of my competitors ship items over £18 from the UK mainland and ship anything under £18 from Jersey which I’m guessing would avoid this.

          I will yield to someone with more knowledge to comment on this thread.

        • Jon, this is the pre-paid VAT scheme. You pay VAT in advance to Jersey Post that would otherwise be charged on import and collected from your UK customer by the UK post office. That’s no different from a UK trader who has to add VAT to their price. If a UK trader sells an item for £10 they have to add VAT. If you sell an item for £10 you have to prepay the VAT but you add that to your price. There’s no difference in the end retail price. At the moment you sell an item for £10 but don’t have to add anything because of LVCR whilst UK traders have to add VAT. That gives you a 20% price advantage. That’s the whole reason we are complaining. We have to add VAT to our price and your goods are avoiding VAT because of LVCR.

        • Jon,

          Postage is not vatable in the UK, however there is a very big BUT. If you are charging the postage as part of a vatable supply consisting of goods and postage then the total including the postage IS subject to VAT. Guess why this is. It’s to stop you inflating the (zero vat) cost of the post and reducing the (vatable) cost of the goods. Now where have I come across that idea before??? Welcome to the wonderful world of VAT notices.

    • Jon,

      If you are not in the VAT area you shouldn’t have invoices with VAT on to reclaim. Tell your suppliers to deduct the VAT before supplying you. If they won’t, find new suppliers!

      • These are some of the services that remain exempt from VAT
        UK Services
        First and Second Class (Stamped, Franked and PPI)

        I guess that as most of us use PPI accounts then it is exempt from VAT then?

  42. Business as usual