Channel Islands VAT loophole is closed
Wednesday 09 November 2011
A loophole that exempts DVDs and other cheap goods dispatched from the Channel Islands from VAT is being closed, ministers have announced.
Relief on products costing up to £15 now costs the Government around £140 million a year after the number of companies taking advantage of the arrangement increased "dramatically", according to the Treasury.
Ministers said ending the "exploitation" of rules will increase fairness for UK businesses.
From April 1 next year the Low Value Consignment Relief (LVCR) will no longer apply to goods sent to the UK from the Channel Islands.
Exchequer Secretary to the Treasury David Gauke 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.
"We are also protecting a significant amount of tax revenue.
"By making these changes, we are striking the best possible balance between the costs of collecting small amounts of VAT and protecting the interests of UK taxpayers and businesses."
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