Retail: Crackdown on VAT dodge for CDs and DVDS from Channel islands

The Government is to close a loophole that cost it an estimated £100m in lost taxes and allowed retailers to ship CDs and DVDs to the UK without paying VAT.

The Chancellor is to remove VAT relief for goods priced below £15 that are sent to the UK from the Channel Islands from 1 April 2012.

Low Value Consignment Relief has allowed online retailers, including The Hut and Play.com, as well as HMV and Asda, to undercut physical retailers on the high street with no presence in the Channel Islands. This has resulted in the Government suffering a £100m shortfall in taxes, according to accountancy sources.