VAT, Tax Havens and TJN Consistency ¬´ Bad Conscience.
Paul Sagar on why Channel Island VAT abuse is market abuse, and so bad for us all.
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As an islander it is very hard to condone some of these practices although I would definitely distinguish between companies like Specsavers and Healthspan, both of which employ hundreds of islanders doing real jobs, and both of which are owned by genuine long-term residents who built the businesses from scratch, and certainly not just on the back of the VAT exemption, and the likes of Amazon with their shipping circuit just to avoid the VAT. Part of the problem is that the scale of the fulfilment industry is known only to the companies themselves and to the local post office and freight companies, unlike the financial services industry which is heavily regulated and publishes a wide range of data.
What I do find hard to understand, given the high cost of shipping anything to or from the islands, is the commerciality of sending something to and from the islands from/to the UK to save 15% VAT on an item worth less than £18. Take a DVD costing £10, which saves £1.50 of VAT. That sum must be all but totally absorbed by shipping or postage costs. But I suppose that even if there was a 30p saving then in such a competitive DVD sales market that represents a market share advantage.
Certainly the aspect of sending orders first to the islands and then out to the customer seems ridiculous. I can see more commerciality in holding a large stock in the islands from which future orders are met.
The reference to Latin American flowers and narcotics money laundering many years ago is not one that I have ever heard before and nobody I have spoken to either has ever heard of this. I would be inclined to take it with a pinch of salt because after all these years I’m sure somebody would know something.
Surely a more relevant issue here is what will happen in the future? Music is almost entirely consumed via the internet these days, video is going that way and e-books are already taking off.
In 5 years time, very little will be physically exported: everything will sit on computer servers and be downloaded for a price. And it is hard to see how any government could try to impose VAT on electronic content of this sort.
Rupert
If you listen to what I said on the radio you’ll note I defended businesses that really do add value on the island
I’m no enemy of Guernsey – even though your very foolish ministers won’t go near me – I’m just an enemy of tax avoiders
Richard
Richard
I haven’t yet been able to listen to the radio interview as my speakers aren’t working, so apologies if I missed those particular comments.