Channel Island VAT loophole to close
The government has announced plans to close a loophole which has allowed low value goods such as CDs and DVDs sent from the Channel Islands to be exempt from VAT.
From 1 April 2012, Low Value Consignment Relief (LVCR) will no longer apply to goods sent to the UK from the islands.
In a statement issued today, the treasury said the reform will bring increased fairness for UK businesses, benefit the UK economy and protect millions of pounds in tax revenue.
However, it is thought that the move will result in significant repercussions for a number of large online retailers which have set up bases in the Channel Islands to benefit from the concession.
David Gauke, exchequer secretary to the Treasury said: "These reforms will ensure that UK companies, especially small and medium-sized enterprises, can compete on a level playing field with those larger companies with the resources to set up operations in the Channel Islands."
Today Retailers Against VAT Avoidance, a group established to campaign on the issue, welcomed the move following its claim that the concession gives the Channel Island mail order industry an unfair advantage over the UK mainland.
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