The Channel Islands’ VAT abuse just goes on and on

Posted on May 12 2011

From the Telegraph:

Under the noses of HMRC and through a scheme administered on their behalf by the Channel Islands Postal Authorities, mail order goods bought from online retailers are being posted to UK customers in packages showing postage costs at 50 times the standard price, while the goods inside are stated as costing only a fraction of their actual retail price.

By reducing the product price to below £18 and shifting the difference onto the cost of postage, which is exempt from VAT, products regardless of their original price become eligible for Low Value Consignment Relief (LVCR) and enter the UK without a VAT charge.

Telegraph Expat has seen a Jiffy bag containing a 16GB flash card arrive from Flash_Memory, a Channel Islands mail order company with labelling that shows a false postage cost of £22 and a false product cost of £17.99.

According to official figures from Jersey Post, the Jiffy bag in which it arrived should have cost no more than 50p to send.

I stress: those are their words re costs.

But if they're right - and they reproduce the invoice on their site - then the evidence of abuse of the Channel Islands for VAT purposes is growing by the day.

And note who is meant to regulate this for HMRC - the Channel Islands themselves.

Well that was never going to happen.

And the evidence that it's not doing so looks to be strong.


Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:

You can subscribe to this blog's daily email here.

And if you would like to support this blog you can, here:

2

2 Responses

  1. Tim Johnson says:
    May 12 2011 at 12:51 pm

    I agree that the Low Value Consignment Relief is one that needs reform. I don’t think that merely reducing the threshold to £15 – as is proposed – goes nearly far enough.

    The article says ” There is no suggestion they have done anything illegal.” Is that really correct or are the Telegraph just trying to protect themselves? VAT is not my area of expertise, but it does seem very strange to me that it would be legal to inflate the mailing cost of an item in order to then artificially reduce the selling price of the goods. It certainly should not be.