There is a Channel Isles tax loophole that allows companies to
sell VAT free Cd's and DVDs online to the UK. Vendors as varied and well known
as Tesco and Amazon will be affected if the loophole is closed. Not to mention
those that are using these stores to avoid paying a VAT. In this article today
from Computer Interactive, we can read why the practice is coming
under scrutiny.
 Both
Jersey and Guernsey have said they will clamp down on companies such as
Amazon, HMV and Tesco that use the Channel Islands as a base to sell goods
worth less than £18 to UK consumers. These retail giants have picked up a
large chunk of the online DVD and CD market as UK consumer reap the
benefit of cheaper prices. HMV is reportedly selling a massive 100,000
VAT-free CDs to the UK a week through its website.
But the loophole is having an
effect on tax revenues. Government Minister John Healey has been actively
lobbying against the tax break and told a Treasury sub-committee meeting
in February 2005 that the Treasury is losing £80m a year in revenue from
the activity. He said this loss is expected to rise to £200m in the next
couple of years.
Other organisations have also
complained saying it is badly affecting small companies in the UK,
including the Forum of Private Businesses, the Association of Independent
Music (AIM) and the British Phonographic Industry (BPI)
The Jersey
government said it now fears that the resultant negative publicity 'is in
danger of undermining the Island's good international reputation and
integrity." |
The article goes on to say, that an
unnamed Tesco representative said that they are "monitoring the
situation" but in the meantime, it's business as usual. They intend to do all
they can to continue to offer the best value for their
customers.
Source: ComputerActive
