Channel Islands challenge VAT plan

 

The Channel Islands are urgently challenging the legality of proposals they fear could "devastate" a thriving internet trade in VAT-exempt goods, including CDs and DVDs.

They are asking a High Court judge in London to block Government plans to end exemption for low value imports from the islands.

The exemption under EU law has led to the growth in the last decade of a multi-million pound business in which low value items are ordered over the internet by UK consumers.

The exemption was introduced to expedite trade involving "distance selling" and to ensure items were not held up in the postal system.

It currently applies to goods purchased outside the EU for less than £15 under a tax rule called low value consignment relief (LVCR).

UK retailers have condemned the waiver, in the case of the Channel Islands, as an unfair loophole which is costing them trade and jobs.

But lawyers for Jersey and Guernsey argued in court that abolition would be unlawful and lead to devastating consequences for the local economy and employment.

David Vaughan QC, applying for judicial review on behalf of Jersey, said there were fears that if the islands lost today's case it might lead "to the whole trade leaving and going to Switzerland or some other place" outside the EU.

Mr Vaughan argued the exemption did not amount to an abuse or evasion of tax, and the UK had no power under EU law to remove it.

Sam Grodzinski QC, for Guernsey, said at the heart of the case was the simple proposition that the UK could not lawfully allow an exemption on the importation of goods "from every country in the world outside the EU - except for Guernsey and Jersey".

The Channel Islands qualify for the exemption because they are not considered as part of the EU for VAT purposes.

The court heard the chancellor and HM Customs and Revenue plan to introduce legislation removing the Channel Islands exemption in the Budget on March 21.

Mr Vaughan urged Mr Justice Mitting to give a ruling before budget day.

He told the judge that, if the court ruled against the Government, the proposals would not be put forward as part of the Budget.

Retailers Against VAT Avoidance Schemes (Ravas), which represents about 80 UK mainland internet and high street retailers, are submitting to the court that the exemptions amount to an unfair loophole that should be closed.

Ravas solicitor David Greene, partner with law firm Edwin Coe, said ahead of the hearing: "Ravas and its members have been campaigning for the past ten years to abolish the loophole that allows retailers based in Jersey and Guernsey to avoid VAT on low value goods ordered over the internet by UK consumers.

"As a result of Ravas's pleas to the European Commission the UK Government has at last clamped down on this abuse.

"Jersey and Guernsey are saying that this will affect employment in the Islands but this VAT avoidance scheme has already seen businesses close and job losses in the UK.

"All that retailers here are seeking is an even playing field."

The hearing continues tomorrow.

PA

Suggested Topics
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebooksAn unforgettable anthology of contemporary reportage
Arts and Entertainment
Robert De Niro, Martin Scorsese and DiCaprio, at an awards show in 2010
filmsDe Niro, DiCaprio and Pitt to star
News
i100
News
In this photo illustration a school student eats a hamburger as part of his lunch which was brought from a fast food shop near his school, on October 5, 2005 in London, England. The British government has announced plans to remove junk food from school lunches. From September 2006, food that is high in fat, sugar or salt will be banned from meals and removed from vending machines in schools across England. The move comes in response to a campaign by celebrity TV chef Jamie Oliver to improve school meals.
science
Sport
England captain Wayne Rooney during training
FOOTBALLNew captain vows side will deliver against Norway for small crowd
Life and Style
Red or dead: An actor portrays Hungarian countess Elizabeth Báthory, rumoured to have bathed in blood to keep youthful
health
News
peopleJustin Bieber charged with assault and dangerous driving after crashing quad bike into a minivan
News
peopleHis band Survivor was due to resume touring this month
News
people'It can last and it's terrifying'
Life and Style
fashionModel of the moment shoots for first time with catwalk veteran
Sport
Radamel Falcao poses with his United shirt
FOOTBALLRadamel Falcao's journey from teenage debutant in Colombia to Manchester United's star signing
Life and Style
fashionAngelina Jolie's wedding dressed revealed
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Front-Office Developer (C#, .NET, Java,Artificial Intelligence)

£30000 - £45000 per annum + benefits+bonus+package: Harrington Starr: Front-Of...

C++ Quant Developer

£700 per day: Harrington Starr: Quantitative Developer C++, Python, STL, R, PD...

Java/Calypso Developer

£700 per day: Harrington Starr: Java/Calypso Developer Java, Calypso, J2EE, J...

SQL Developer

£500 per day: Harrington Starr: SQL Developer SQL, C#, Stored Procedures, MDX...

Day In a Page

Chief inspector of GPs: ‘Most doctors don’t really know what bad practice can be like for patients’

Steve Field: ‘Most doctors don’t really know what bad practice can be like for patients’

The man charged with inspecting doctors explains why he may not be welcome in every surgery
Stolen youth: Younger blood can reverse many of the effects of ageing

Stolen youth

Younger blood can reverse many of the effects of ageing
Bob Willoughby: Hollywood's first behind the scenes photographer

Bob Willoughby: The reel deal

He was the photographer who brought documentary photojournalism to Hollywood, changing the way film stars would be portrayed for ever
Hollywood heavyweights produce world's most expensive corporate video - for Macau casino

Hollywood heavyweights produce world's most expensive corporate video - for Macau casino

Scorsese in the director's chair with De Niro, DiCaprio and Pitt to star
Angelina Jolie's wedding dress: made by Versace, designed by her children

Made by Versace, designed by her children

Angelina Jolie's wedding dressed revealed
Anyone for pulled chicken?

Pulling chicks

Pulled pork has gone from being a US barbecue secret to a regular on supermarket shelves. Now KFC is trying to tempt us with a chicken version
9 best steam generator irons

9 best steam generator irons

To get through your ironing as swiftly as possible, invest in one of these efficient gadgets
England v Norway: Wayne Rooney admits England must ‘put on a show’ to regain faith

Rooney admits England must ‘put on a show’ to regain faith

New captain vows side will deliver for small Wembley crowd
‘We knew he was something special:’ Radamel Falcao's journey from teenage debutant to Manchester United's star signing

‘We knew he was something special’

Radamel Falcao's journey from teenage debutant to Manchester United's star signing
'I’ll tell you what I would not serve - lamb and potatoes': US ambassador hits out at stodgy British food served at diplomatic dinners

'I’ll tell you what I would not serve - lamb and potatoes'

US ambassador hits out at stodgy British food
Radio Times female powerlist: A 'revolution' in TV gender roles

A 'revolution' in TV gender roles

Inside the Radio Times female powerlist
Endgame: James Frey's literary treasure hunt

James Frey's literary treasure hunt

Riddling trilogy could net you $3m
Fitbit: Because the tingle feels so good

Fitbit: Because the tingle feels so good

What David Sedaris learnt about the world from his fitness tracker
Saudis risk new Muslim division with proposal to move Mohamed’s tomb

Saudis risk new Muslim division with proposal to move Mohamed’s tomb

Second-holiest site in Islam attracts millions of pilgrims each year
Alexander Fury: The designer names to look for at fashion week this season

The big names to look for this fashion week

This week, designers begin to show their spring 2015 collections in New York