As the Telegraph reports:
The Channel Islands have lost their judicial review against the end of Low Value Consignment Relief (LVCR). The hearing lasted three days in London and critics say the ruling puts thousands of jobs in Jersey and Guernsey at risk. As of April 1, internet mail order goods from the Channel Islands will no longer be VAT exempt.
That's £100 million (or much more) of tax loss to the UK economy closed off. As the Telegraph also noted:
In today's court hearing, the legal team representing the UK said it was a problem the government felt it had to address, given the scale of the industry and the value of the tax they feel is being avoided. Lawyers for Jersey and Guernsey argued that abolition would be unlawful and lead to devastating consequences for their economy.
Not half as devastating as the cost to the UK has been.
Or as devastating as the cost of the tax abuse that these islands promote has been on the poor nations of the world - where Christian Aid estimate 1,000 children a die as a result of tax haven abuse and lost medical services.
David Vaughan QC, on behalf of Jersey, said there were fears that the legislation might lead "to the whole trade leaving and going to Switzerland or some other place" outside the EU.
Then we'll stop them too. The precedent has been set.
Jersey's economic development minister Alan Maclean said he was extremely disappointed by the court's decision and was considering a further appeal.
"The changes, which are targeted against the Channel Islands alone, create an uneven playing field," he said. "We know that some businesses will find it difficult to compete under these circumstances and as such, jobs are likely to be lost. This will be a very difficult time for hundreds of islanders who are involved in the fulfilment industry."
He never showed such care for the thousands who lost their jobs in the UK.
Nor does he care about promoting wholly artificial tax avoidance to undermine democracy. I spy crocodile tears.
But the hero of the hour was, as it has always been on this issue Richard Allen, who has campaigned tirelessly on this issue and who said: said:
While we of course have sympathy for the effect on employment in the Channel Islands that the closure of this industry will have, it is for the people of the islands to strongly question their elected representatives as to how they could possibly allow an industry that was based on the abuse of tax to become so important to the Islands' economy.
They could ask that of finance as well.
But that's another campaign won, for good.
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There are plenty more tax fiddles on our off-shore islands that need to be seen to, but it is a good start.
No tax fiddle or tax avoidance as stated by Justice Mitting. The Channel Islands lost on the mere point that the EU could opt in and out of the ruling with non-EU countries as it saw fit. This does not seem right when a law is “to suit” the EU when required.
Unfortunately a lot of unemployed with horrendous knock on effect to the economy. Why penalise us? Pick on the little islands? Of Course. I bet Switzerland will NOT get the same treatment!
The EU created the rule to stop tax abuse
And that’s what you did
Game over
Whilst I have no love for the Guernsey fulfilment business, and I am glad it will disappear, the BBC reports “Giving Channel Island ministers permission to challenge his ruling, the judge said the EU was a “complex organism” and the case covered a “difficult area”. He said lawyers had raised issues of “great importance” which merited the “consideration of a higher court”.
It therefore seems a bit premature to say the “VAT abuse has been outlawed for good”.
Will they throw good money after bad?
I doubt it
It’s not their own money – only that of the taxpayer – so they might well do (This is the way Jersey government works). But It won’t make any difference, unless they can get the appeal heard before 1 April.
I think it is widely accepted that the case was not brought with any hope of the having the legislation overturned (except perhaps by those involved in exploiting the loophole) but that the legal ruling may well help protect a larger industry in the islands.
Of course they will, Richard – it’s what Jersey States specialise at. All of their pockets have burn holes in them.
@ Andy, same in Guernsey. The local police just spent £180K on an armoured Land Rover…..
@ JJ
Why exactly? Just in case the WI turn militant?
Richard Allen has it spot on. In Jersey our politicians have acted disgracefully on this issue.
Justice Mitting said that the UK governments lawyers argued their case “handsomely” and their victory in this case was resounding. Senator MaClean said that the Jersey government took the decision to appeal based on sound legal advice that said they had a strong case. But since the result was so resounding, one really has to question whether MaClean is being truthful when he says they were given god legal advice. I’m studying law and even I could have told them that they didn’t stand a snowflakes chance in hell.
My theory is that the Jersey government (and presumably Guernsey too) knew full well that this escapade was doomed to failure, but they did it anyway, and they did it for one simple reason – to create a scapegoat.
Jersey has been facing economic problems for years now. Our economy is shrinking, unemployment is rising and the States spending is out of control. All of this BEFORE the end of fulfilment. Things are now about to get a lot worse in the island, and it is all down to the incompetence of the likes of MaClean and Senator Ozouf who have been running this island terribly. But the fact they have put up a fight against the UK despite the odds, portrays them in Jersey as our corageous heroes who stood up the big bad UK government to fight for the ordinary man on the street in Jersey, when really they have been the cause of our problems here. This will rally up everyone in Jersey to get jingoistic and anyone who says “hang on, maybe the UK is right?” will be labelled as a traitor.
I just pray that my fellow islanders see through this propaganda and deliver them the beating they deserve at the next election… I can dream right?
Keep up the good work Richard, this is quite possibly my favourite blogsite for Channel Island economic news!
Sam
Richard Allen has it spot on. In Jersey our politicians have acted disgracefully on this issue.
Justice Mitting said that the UK governments lawyers argued their case “handsomely” and their victory in this case was resounding. Senator MaClean said that the Jersey government took the decision to appeal based on sound legal advice that said they had a strong case. But since the result was so resounding, one really has to question whether MaClean is being truthful when he says they were given god legal advice. I’m studying law and even I could have told them that they didn’t stand a snowflakes chance in hell.
My theory is that the Jersey government (and presumably Guernsey too) knew full well that this escapade was doomed to failure, but they did it anyway, and they did it for one simple reason – to create a scapegoat.
Jersey has been facing economic problems for years now. Our economy is shrinking, unemployment is rising and the States spending is out of control. All of this BEFORE the end of fulfilment. Things are now about to get a lot worse in the island, and it is all down to the incompetence of the likes of MaClean and Senator Ozouf who have been running this island terribly. But the fact they have put up a fight against the UK despite the odds, portrays them in Jersey as our courageous heroes who stood up the big bad UK government to fight for the ordinary man on the street in Jersey, when really they have been the cause of our problems here. This will rally up everyone in Jersey to get jingoistic and anyone who says “hang on, maybe the UK is right?” will be labelled as a traitor.
I just pray that my fellow islanders see through this propaganda and deliver them the beating they deserve at the next election… I can dream right?
Keep up the good work Richard, this is quite possibly my favourite blogsite for Channel Island economic news!
Sam
Sam,
You are not alone.
But the real issue is this: something like 80% of those who work in fulfilment have at least 5 years’ residence and will thus be eligible for Social Security. The fact that a lot of them are neither Jersey nor British could lead to some very ugly things happening, unless a lot of jobs appear, and fast – and I don’t see that happening.
James
James
That worries me too
But it means Jersey may also have to face up to the responsibilities for being a semi-state, something it has for too long ignored
If it can’t the Uk will arrive very soon after it fails
Which is the perennial backstop
Richard
James, I think you are exagerating the problem. Surely the residency laws will mean the immigrant workers will leave? In Guernsey it is very hard to imagine the Latvian community who have lost their jobs staying to live on benefits. They are far too proud and hardworking to do that (plus the benefits are meagre) and they will all lose their work licences without employment.
Some of the local reporting is comical on the whole area. The local press seems to believe we’ve all been terribly wronged by the UK government…..crazy! They also report what a massive impact it is going to have on our exports, conveniently forgetting that imports will be reduced by virtually the same amount!
Agreed. I’ve already heard people gearing up ready the bash the immigrants and calls for a stricter work permit scheme (which may actually be a good idea, but the rhetoric behind it is very worrying)
Jersey is a fantastic place to live and could really be an ideal place to test a model for 21st living based on sustainability and using local products. I proposed to the Economic Development Department in 2005 that the island should look at becoming wholly organic. We could move to electric vehicles easily and have the cleanest environment in Europe. All easily achieved. Instead, we have focussed entirely on economic growth without a thought for population control or a creaking infrastructure.
I have no problem with most of the financial services industry, which I regard as well regulated and almost entirely clean (much better than most onshore jurisdictions, but on that we’ll have to agree to disagree). But fulfillment was a disaster for everyone in Jersey: low paid, low skilled, unsustainable, environmentally unfriendly, two fingers to everyone else. The main beneficiaries were the small number of business owners and the large number of UK consumers who got reduced prices as a result (don’t forget them).
Sustainable zero growth that celebrates the fantastic natural beauty and resources of Jersey, that should be the focus. And the benefits to society would far outweigh whatever fulfillment brought.