George Osborne Indicates his Intent to end LVCR Trade

An article in the Telegraph on the 8th of April 2011 reported on a meeting of the British Chambers of Commerce on the 7th of April at which Chancellor of The Exchequer George Osborne was present. Mr Osborne was asked by the Jersey Chamber as to whether he felt that the relief really was a threat to the economy . Mr Osborne replied “I don’t think you should allow an industry just to spring up on the back of a kink in the tax system” he then went on to say “The Channel Islands have many good things going for them as good places to do business, but I think frankly that a business that has built up on the back of a particular kink in our tax system around low-value consignment relief and that has had quite an impact on high street music stores, for example, in Britain is unfair”

We couldn’t have put it better ourselves.  It appears that the days of this arrangement really are numbered.


  1. Get real, “impact on high street music store” pffff, stop looking at little old Jersey and focus your eyes on Apple…Luxemburg based. The crying is over for the Music store owners..and now Video Stores…Blockbuster could see the music….time to step out of the 1990’s and come down to reality.

    1. Downloads attract VAT at the rate in the country in which they are downloaded… From Apples website “Your Apple Store purchases will be taxed using the applicable VAT tax rate for your country” In any case…..why would you buy a download ? If everyone wanted downloads then why are all these companies in Jersey flogging CDs and Blue Ray ? Oh…sorry, I forgot looks like they won’t be soon!

  2. Ooh! look at the bitter little man who’s lost his toy. Hear that guys..the voice of The Channel Islands. I know a label that just old 10,000 vinyl LPs of one title.

  3. Glen – Osborne said music stores “for example”. Music stores are not the only stores on the high street damaged by this scam. I sell cosmetics and I’m sick of the likes of your mates selling stuff VAT free that they are buying in the UK from the same supplier I buy from. I’m glad this is ending. Not soon enough in my view. Bye bye….hope the tomatoes grow well!

  4. While I personally don’t get any satisfaction from any suffering that may be caused to CI based resellers over the coming years I second the fact that it’s not only music stores that have been hit by LVCR.

    One by one my competitors (computer consumables, nothing to do with music) have been forced offshore due to the ridiculous round-tripping that was started by a handful of companies. It’s reached a tipping point where soon all of us will have to be offshore and I for one don’t feel I should have to move countries and round-trip goods 400 miles in order to make my business (which supplies predominately UK mainland consumers) viable again.

    I tip my hat to George Osborne for finally admitting that this is an issue that needs addressing and not simply following the Labour tactic of sticking his head in the sand and assuming that things aren’t going to get worse.

  5. I’ve always argued passionately about the moral and ethical issues surrounding the LVCR issue. Finally George Osbourne has made the only just and fair decision – to close it down.
    Hurrah for the dreaming spires. Hurrah for the playing fields of Eton. Hurrah for the moral fibre of our ruling elite that magnanimously guide our green and pleasant land on to victory. Have you got any Hawkwind on vinyl?

  6. Lets hope you have deep pockets, this is far from over. Think again…China has a major factor in all of this, just ask the memory card boys. Sorry boys but the latest rumor is Switzerland is welcoming this with a smile. Good luck putting restrictions on the Swiss…Just ask Tesco who is already there. Also news from Hong Kong is there is a major player looking into express post and massive reduced price….Who is collecting VAT from HK and Swiss ????

    1. Glen – This argument is starting to repeat with the usual ‘Chinese’ dimension. Last comment on this one we’re afraid. The relief is granted on import so its fully under the UK/EUs control as to whether VAT is charged to the importer as parcels enter the UK/EU so in answer to your question VAT is collected on import from the person the parcel is addressed to. The only reason that problem doesn’t occur in relation to Channel Islands is because of the pre-paid VAT schemes which actually make the LVCR abuse worse as it means mail order companies can pre-pay VAT on items over £18 and not inconvenience their customers. If it was not for these arrangements it would be impossible to run a mail order from The Channel Islands into the UK as customers wouldn’t tolerate delays and customs charges on the items over £18. Contrary to the myth Royal Mail make money on import parcels with a VAT charge. Changes to the way the postal system works means its also not quite as difficult to police as you think. But in any case Hong Kong is utterly useless for circular shipping and 90% of the complaints about LVCR concern UK distributed/manufactured goods/brands being sent out and coming back not Chinese products. As for Switzerland the EU are also looking at that issue in relation to LVCR now they are wise to this little card trick (which they were unaware of until we told them…its unique to UK). We’re sure you can find stuff to sell mail order from China just as you could find stuff to sell from any other country in the world, but that’s not the issue….

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