The Human Cost of VAT Avoidance ….

RAVAS has had a letter of support from Graham Jones who wrote the excellent and best selling book Last Shop Standing about the demise of the independent record retailer in the UK. It makes sobering reading :

Dear RAVAS

My name is Graham Jones and I am the author of the bestselling book ‘Last Shop Standing: Whatever Happened to Record Shops?’ I am probably the foremost UK expert on independent record shops having almost certainly visited more than any other person that has ever lived. For over 20 years I spent each weekday visiting up to 5 record shops all over England, Scotland, Ireland and Wales as part of my job. Whenever a new record shop opened I would be there in an effort to ensure that my product filled their shelves before my competitors approached them. In 2003, it was clear shops were closing at a phenomenal rate. In fact, according to the Entertainment Retailers Association, over 600 have closed in the last 5 years leaving only 269 surviving. The carnage is continuing and I felt it was important that somebody document their stories before they all closed down. I decided to tour the UK and interview the 50 record shops that I thought would be the ‘last shops standing’. I also interviewed ex-record store owners to see where it all went wrong. In my book I cover many factors that have contributed to the decline in record stores but can categorically say that the silent killer of record shops is the abuse of Low value Consignment Relief (LVCR) by offshore based online retailers and the impact this abuse has had on UK Independent retails ability to compete on the internet. It’s often forgotten that many of the long established independent retailers had websites.   Every dealer I interviewed would bring the subject up – and how powerless they felt against the unassailable VAT advantage Channel Island retailers were using to compete on the UK mainland. This abuse is the key reason why shops continue to close.

Things will get even worse for those who are left when VAT rises to 20%, giving the Channel Island based operators an even greater unfair advantage. Companies taking advantage of this loophole include Tesco, HMV, Play, Amazon and Sainsbury’s. These are some of our largest companies. Do they really deserve a 20% advantage over High Street retailers?

I have witnessed the misery this loophole has created. Family businesses, many who have been trading for years, are closing down, people are losing their homes, people are suffering nervous breakdowns, and in one case a customer of mine took his life so depressed was he about losing his businesses. Yet this should all have been avoided.

On so many occasions I have seen people come to the counter of a record shop, ask about a new CD – then telling the owner that they will order it off of Amazon or Play VAT free. Can you imagine how frustrating this is for the shop owners?

One of my customers had a man ask to see all the Fleetwood Mac CDs he had in stock. He had 8 different titles. The man took his mobile phone out and took a picture of each one. He then sent the pictures to his wife, telling her to order these CDs from Play.com as they are bound to be cheaper. The record shops just cannot compete in this unfair marketplace.

I truly believe that the record shops we have left will thrive if this law is changed and they have the chance to compete. If they close we will lose diversity and choice. It is the independent record shop that promotes new music and champion’s local talent.

Without record shops music will stagnate and we will all be worse off.

They are part of our cultural heritage. Their future is in your hands.

Graham Jones

http://www.lastshopstanding.co.uk/flashes/intro.html

5 Comments

  1. I don’t think those making a quick buck out of this scam realise the hopeless anguish of those being caught up in an unjust situation. If you can’t go offshore (and lets face it only people with huge sums of money or mates in The Channel Islands can do that) then you are left with the choice of telling the Inland Revenue to get stuffed when the VAT is due (not an option) or watching hopelessly as a solid business you have built up over many years slowly dies. It’s like starving to death. Horrible.

  2. This is too true. Excellent to see Graham supporting this campaign; he has long been an advocate of fairness in VAT – and it is true that the human as well as economic consequences of the multinationals’ shafting of the taxpayer is a too little known issue. I just hope that the citizens of the UK can unite and force the big companies to do what is just.

  3. This actually sums up the absolute disgrace this abuse is…even though my business has suffered due to the abuse for a number of years now (although thankfully not to the extent I have been forced to close down) it still angers me every single time I hear another story UK companies suffering by the lack of action of the very people we vote in to parliament every four years.

    It is unbelievable, what other country in the world holds the businesses of another territory in a higher regards than the ones who vote them in and pay tax!

    Stop wasting time and effort on World Cup Bids and start looking after the very businesses that make the country what it is today…before it is too late…

  4. I have just had to return stock to a suppler, I was first to market with a new product in the UK, hit it with Ebay and Amazon aswell as through my site. All went well for 3 months and was considering taking on extra staff (all future tax payers and straight of the dole que) then I got hit by unfair competition selling the same products VAT free from the channel islands.

    Now the recruitment drive has been shelved and as far as expansion is concerned, its a big no no.

    So another UK tax paying company supressed by the abuse of LVCR, it’s vulgar, and an absolute insult to UK businesses. If the goverment wants to find ways of paying of it’s inherited deficit then re-assessing the LVCR is a surefire way to appease UK voters, not increasing VAT to 20% and cutting public services.

    I am absolutely dumbfounded that they have allowed this to continue.

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