A comment made on this blog whilst I was away needs to be given more attention than it will get where posted. It said, referring to VAT Low Value Consignment Relief (LVCR) abuse by Jersey and Guernsey:
Citipost holds a Down Stream Access licence with [Jersey] Postcom so as to be able to compete with the Royal Mail for bulk mail. The [Jersey Competition Regulatory Authority] JCRA have decided to allow Citipost to collect mail on Jersey in the interests of "competition". This application is solely aimed at the fulfilment market in Jersey and would make the products even more competitive against mail and supplied goods in that the postal cost would be reduced by some 50% against the previous Jersey Post pricing.
In allowing this to go forward the JCRA is openly encouraging the growth of the fulfilment sector at the expense of Jersey Post which will lose 70% of their business.
The question is that Citipost will collect the bulk mail on Jersey and take it back to their mainland processing centres where they will sort and re-label the envelopes so as to be injected into the Royal Mail for final mile delivery. Why is this element still free of VAT? Surely Citipost are providing a service that adds value to the supply chain and is aiding and abetting the fulfilment industry on the Channel Islands at the expense of mainland traders who pay their VAT on all products.
This move needs investigating.
So I did a little more investigating. I checked the Jersey Evening Post and found this from April 2009:
The global mail business looking to compete with Jersey Post for delivering packages to the UK says that it may not need premises inJersey to conduct operations.
Citipost DSA, who are looking to compete with Jersey Post for delivering packages to the UK, say it may not need premises in Jersey to conduct operations.
The company has applied for a class one operator licence under the Postal Law to the Jersey Competition Regulatory Authority.
It wants to be able to deliver items such as CDs and DVDs to the UK for fulfilment companies based in Jersey.
The managing director of Citipost DSA, Rob Bradford, said that if a licence were granted, it was likely to use an existing third party operator to do collections and transport the packages to a port for shipping.
He said they were not looking at delivering in Jersey but providing export services for large mail producers.
It is blatantly clear that this system is being set up purely to exploit LVCR as a result. And it is equally clear that Jersey will lose out on jobs and revenue as a result — ending all gain it has from prostituting itself for this purpose.
But it gets worse. This comes from the JEP in May 2010:
SCORES more jobs will be lost, mail deliveries could be slashed to three a week and Jersey Post will be ‘plunged into loss’ as a result of facing full competition as early as this summer, it was announced yesterday.
Managers at the States-owned utility told 250 stunned staff that Jersey Post would immediately embark upon a radical overhaul of its business as it faces losing its most profitable customers from the fulfilment industry.
Staff members were told that the company faced insolvency within two and a half years unless it carried out radical surgery.
So, to fuel tax abuse in the UK the local people of Jersey are to lose their postal service.
This is the madness of states captured by the financial services sector.
This is the madness of deregulation.
This is the abuse of ordinary people caused by big business determined to tax avoid.
It is this madness which is breaking down the structures of society.
And this is why it has to be stopped.
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:
Buy me a coffee!
Richard
Whilst your article is based on some fact – much of it is misunderstood…or mis represented. If you would like to fully understand this issue feel free to contact me.
I would point out that HubEurope is a 100% Jersey company hoping to provide postal services to the Channel Islands in order to support our fulfilment industry.
Christopher Bee
C.E.O.
HubEurope
@Christopher Bee
Please feel free to explain here
What might I have misunderstood?
Can you also explain how I might know you are a 100% Jersey company?
Richard Murphy
Yes please do tell…
@Richard Allen
It’s odd: I’ve heard nothing more from Mr Bee
To bee or not to bee…
Richard
For starters no one has a license to handle goods in the reserved area. The decision is due to be made by the JCRA at the end of October…any abuse of the law opens you up to a fine of up to £1M.
HubEurope is 100% financed and owned by Jersey residents, it will only employ local people and has already offered to save the Central Market Post Office that Jersey Post appear not to be able to justify. You will find information about this on our website. The story for Citipost is slightly different – but not for me to comment on.
The concern about your article is that it seems to support Jersey Post and the propaganda and mis information that has been fuelled by them without looking into the facts. Getting all of your information from the JEP has proved to be a little less than accurate. Jersey Post are inefficient …as an example:- Jersey Post accounts for directors salaries 2009:- Managing Director £133000 plus £46000 bonus. Finance Director £128000 plus £34000 bonus, HR Director £123000 plus £42000 bonus. Three salaries £506000 — and we have not talked about pensions, benefits or expenses.
Jersey Post needs to get back to core business — providing Island based postal services. Not launching initiatives to buy goods off Island (Ship2Me) for £3M or launch a mobile phone service in an island that already has 3 providers(Me:Mo).
The JCRA have stated that should any licenses be issued they will EXCLUDE the 33 million letters that move through Jersey Post — thereby protecting a very lucrative section of the market. The proposed license will allow services to be offered to the bulk mailers that are not currently available and at prices that will benefit the Island.
Finally I would point out that our first two customers benefit from Jersey’s horticultural heritage and not from LVCR.
@Christopher Bee
LVCR was designed for horticulture
You appear somewhat confused about the whole issue
Your diatribe is unbecoming and strongly suggests you wish to undermine the States of Jersey
Is it surprising your motives are not universally trusted?
LVCR was designed for horticulture….can you substantiate this statement?
@Christopher Bee
It is well documented that LVCR came in to help the flower trade from the Channel Ilsands in the early 1980s
Having looked I cannot find a reference to the introduction of LVCR to aid the movement of flowers and horticulture – could you provide me a reference please.
“LVCR is a deregulatory measure to facilitate simple trade and avoid the administrative burden and disproportionate cost of recovering VAT on low-value consignments from outside the EU122; therefore goods, valued below £18, sent from Jersey are exempt from VAT”
@Christopher Bee
Of course you haven’t
This is tax history – and that’s not recorded in regulation. You looked in the wrong place
Tax history of the early 80s says horticulture was the reason for LVCR being extended to the CI
It was recorded in such books as Tolleys VAT at the time
It’s been documented by Prem Sikka
Its also detailed in the 1997 Vat Assurance Review of the Channel Islands 1997 a report commissioned by Customs and Excise (I have a copy but it’s not online) and it was also mentioned in the recent letter from George Osborne that you posted on this blog. The relief was originally allowed in order that perishable goods (flowers) could be expedited through the mail as they were sitting in customs and wilting. LVCR by the way was originally intended to reduce administration not only for Customs (a point heavily laboured by those abusing LVCR as some kind of justification for their abuse) but also for businesses who were ordering urgent low value spare parts for machinery from destinations such as the USA.
For ‘Channel Islands Fulfilment Industry’ read Offshore Tax Loop abusing LVCR
@Richard Allen
Thanks Richard
Mr Allen – thank you for a reply that was informative and not condescending or insulting.
@Christopher Bee
Please re-read your comments on Jersey Post, the JEP and this before starting throwing ad hominem attacks
Your comments on such issues were wholly unbecoming of a business that wants to be taken seriosuly
Also my comment was entirely informative and factual.
@Christopher Bee
Let me clarify my factual comment. Under Halifax exporting goods to a location outside the EU to then reimport them with the essential aim of gaining a VAT relief is an abuse. I know it is the essential aim as every company that has ever offered me the service uses the VAT advantage as the main selling point. If LVCR is abused then HMRC has an obligation under EU law to disallow the relief. Also any UK or EU company will be subject to a legal challenge under Halifax for abusing an EU tax relief. As to why no action has been taken yet, perhaps you know more than we do but certainly offshore tax loop abusing LVCR is the correct description. Unless you’d like to offer an alternative ?
@Richard Murphy Check out the LVCR entry on Wikipedia which now features the correct interpretation of EU law and LVCR abuse. Why pay for advice when you can read it here for free….
@Christopher Bee Check out the LVCR entry on Wikipedia which now features the correct interpretation of EU law and LVCR abuse. Why pay for advice when you can read it here for free….