The deliberate, blatant and wholly inappropriate abuse of UK VAT law by companies loosely based in the Channel Islands is an ongoing scandal costing the UKL Exchequer hundreds of millions a year, which has often been documented here.
The budget VAT increase has just made the abuse more attractive.
And it looks like some are banking on it not ending. As the Guardian notes;
The Hut Group, the fast-growing firm behind controversial VAT-free CD and DVD internet sales for Asda, WHSmith, Dixons, Argos and Woolworths, has begun rapidly expanding into other product areas — including cheap handbags, jewellery, novelty gifts, sun cream and underwear — as it builds towards a stock market flotation early next year.
New websites gifted.com, mybag.co.uk and washbag.com have been launched in the past three months. The move is a bold departure for the Cheshire-based business, which has grown into Britain's third-largest online DVD and CD retailer in the six years since it was set up.
Note: Cheshire based. But Channel Island tax abusing. And now seeking to capitalise on it.
And this is the type of private enterprise that will get us out of recession? I don’t think so.
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It’s about time HMRC did something about it. However, from speaking with retailers operating in this area who’ve met with HMRC it appears that HMRC actually can’t be bothered to clamp down as they feel “it’s not worth it”.
We don’t want the companies here. But it’s your problem, and not ours.
@ Richard
This is one subject (of not many, admittedly) that I can consistently agree with you on. It is anti free enterprise since it destroys the level playing field for businesses collecting VAT. I don’t see a change any time soon as there are too many very powerful vested interests. As I have said before, there is no sense in railing at the Islands. It is a UK issue entirely stoppable by the UK government. Let us hope that we will be pleasantly surprised by the coalition.
I was speaking to an ex-HMRC inspector the other day and this point cropped up. He more or less said exactly what Greg did, HMRC are not interested in this area because it will cost more to collect the VAT then they would actually take.
@JohnBuckles
Which just shows the poverty of HMRC’s thinking in tackling the Tax Gap
Which is why they should lose responsibility for assessing it to an Office for Tax Responsibility
Just saying what I was told by someone who is or was fairly close to the action. Mind you, you can see HRMC’s argument which is more or less what any company would do…no company would spend £25 in administrative expenses to get £20 of income.
@JohnBuckles
Nonsense
The stuff is delivered for net to nothing and it’s economic
If the UK slapped on a £5 minimum fee the business would be dead in 2 days
Problem solved
“I was speaking to an ex-HMRC inspector the other day ”
Of course HMRC Inspectors know exactly what’s going on….
Its a simple problem. We have some very stupid people in control.
@Richard Murphy
You mean a flat £5 fee per item?
@JohnBuckles
Yes
@Richard Murphy
Wouldn’t that cost alot of money to collect in itself?
@JohnBuckles
No
Because it would kill the market dead
Which is the intention
VAT fraud is the one of the more innocent activities conducted on and from these wretched and unsavory islands.
Britain (and the world community) should act NOW to close down the Isle of Man, Jersey and Guernsey.
What HMRC are really saying is that if they charge VAT on the Channel Islands the businesses will begin to collapse and then it won’t be worth collecting. So let’s split the whole of the UK up and let’s see where it’s worth collecting. then let’s split businesses into small businesses and large businesses. Me thinks we will find that the conclusion will then be will be to raise VAT threshold to a million pounds as a guess and sack 70% of the VAT staff. Oh, and that will cut out the fiddle not only in the channel Islands but also for all the cash businesses in the UK.