UK zero-VAT threshold to be removed for Channel Islands’ businesses |
8 November 2011
Following EU intervention about unfair trading practice, the UK Treasury was pressed to action changes to close down the Low Value Consignment Relief (LCVR) facility on goods being supplied from the Channel Islands into UK The Treasury has advised that the practice will end on April 1st 2012. Normally goods imported into the UK from outside the EU (the Channel Islands are included in the non-EU category for VAT purposes) have to have UK import VAT applied to them on entry. In 1983, the UK tax office decided it was not worth while collecting this import VAT on low cost items where the import value per consignment was less then £18. Enterprising businesses selling CDs, DVDs, health food supplements, printer cartridges and other high volume low cost items sprang up in Jersey and Guernsey to take advantage of this loophole. While UK businesses have to charge and pay over 20% VAT, Channel Islands companies pay nothing, making their goods highly and unfairly competitive. These businesses will now be disadvantaged by remaining there because, with no VAT advantage, they will require to consider lowering their logistics costs. This may mean that they may consider relocation. |
