Channel Islands last minute High Court bid to avoid VAT

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The subtitle in the Guardian this weekend read “After years of downplaying its significance, Guernsey and Jersey will admit to the high court this week that losing tax-exempt status would be devastating”.

The article highlights the last ditch High Court effort to overturn the decision to end VAT Low Value Consignment Relief for the Channel Islands which has allowed eCommerce companies to ship low cost products without charging UK consumers VAT.

The Guardian article makes for an interesting read with the claim that not that much VAT is avoided in the first case and yet at the same time removal of the supposed irrelevant amount of VAT that will have to be paid will devastate the Channel Island’s economy and lead to a 50% increase in unemployment.

Whilst I have every sympathy with those possibly facing unemployment it’s hard not to also sympathise with UK based online retailers who have for years been placed at a disadvantage by the tax loophole that the Channel Island based businesses have enjoyed.

The only real issues are will removing the tax advantage make any difference to UK based retailers (is it just too late for anyone to care?) and of course following April the 1st, assuming the high court doesn’t overrule the Chancellor, just how much VAT will be collected and flow into the nations coffers?

2 Responses

  1. I suspect that the net gain to the exchequer will not be enormous but we need every penny we can get right now and this is a ludicrous out of date perk that has to go.

  2. The other issue is will they just move to Switzerland where I understand they will be able to do the same thing. Mind you – not a cheap place to operate!

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