I have campaigned for several years to end the abuse of VAT Low Value Consignment Relief by companies based in the Channel Islands.
Richard Allen has dedicated countless hours to doing so and his threat of legal action against the UK, back by the EU, has been very persuasive for George Osborne.
The result is that LVCR will cease to apply altogether from the Channel Islands of Jersey and Guernsey next 1 April.
Another Channel Islands' tax abuse bite the dust.
When will they read the writing on the wall?
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“as Murphy says in summation. “The tax burden has shifted dramatically from businesses using Jersey as a tax haven to the local population who are now paying for the privilege of hosting the tax abuse industry whilst at the same time their economy is facing ruin as local politicians realise they have no idea how to plug the continuing deficits they face.””
http://money.aol.co.uk/2011/11/08/ordinary-people-pay-for-tax-havens/
Is is right that just the channel islands are being singled out here? In 2006, when Jersey “clamped down” on non-local fulfilment, Tesco Jersey moved to Switzerland – I believe it’s still there (though probably trading under another name).
These changes need to be applied to all non-EU imports, only then will the playing field be level.
There is little evidence of abuse elsewhere, as yet
This measure is intended to help business and where it can it should continue
When it undermines fair competition the precedent has been set – the loophole will be closed
I think that’s fair
And let’s be clear – as with most things in Jersey the 2006 action was a sham
As a British taxpayer and resident, I will now pay more for my mail order goods. The companies sending the goods will move to Switzerland or wherever is tax free and start again with no benefit to the Government or myself.
The sad git who campaigned for this should now go and shoot himself for wasting the time of a lot of people and achieving precisely nothing!!
Except that the reality is that now the precedent s set Switzerland too will be blocked if it allows this
And with the greatest of respect I think I could suggest a better recipient of the terms sad and git
A selfish remark from someone that cares little for anybody other than himself.
Of course labour shifts around the world.
The Tax Justice campaign is to ensure that labour is located in jurisdictions showing due regard for the tax laws of other countries – and humanity.
In this re-adjustment there may be some “inconviences “for the relatively well off.
I think the way it was done was that goods were shipped from the UK to the channel islands and then back again? The VAT saving outweighed the costs of this charade, but when you have to go further, the costs go up, so it may only be worth doing when the other territory is so close. Have I got that right?
Yes
And the idea that the goods will come from Switzerland etc is unlikely for just that reason
But if they do – they’ll be blocked too
“When will they read the writing on the wall?”
Never… unfortunately. Our beleaguered Council of Ministers (COM), if at the very tip of a mast of a fast sinking ship, with sharks snapping at their heels, would swear blind that everything was going to be okay.
Our COM, especially Ozouf, are so far removed from any sense of reality that we have no chance of changing track for the better.
My question would be, if Play.com was bought by this Japanese company a few weeks back (it was Japanese, wasn’t it?), where are they taking the business? They must have identified a jurisdiction that would be suited to their type of business.
Andy,
Play has had a distribution centre in Switzerland for many years. Let’s be honest: the real value in play.com was its name. If the Japanese want to make it a global brand selling across the EU, Switzerland is probably a good place to set up shop.
In my view, Jersey should never have got so deeply involved in fulfilment. It sucks in unskilled, largely migrant labour, pays little in the way of taxes and creates a lot of ill will. The benefits were all felt by the consumers in the UK who were able to buy products at a 15-20% discount.
I seriously wonder how you can keep a straight face and say that
Looks like the distribution will be moved to Morocco. Along with all the UK packing jobs (est.at 50,000). So now as well as supporting the Channel Islands when they go bust, that is 50,000 more on the dole and no extra £140M VAT coming in.
Well done to all.
And I reiterate – the move will be blocked from there too
The precedent is set
You reckon? All they have to do is ship it across the straights to spain and drive it up. It may cost a bit more, but the amount they save by having it packed in Morocco will far out weigh that. Morocco will be happy to have the jobs. Spain’s ports and logistic firms will be glad of the business, and the uk cannot block free movement from the EU – unless they leave! .
But VAT has to be charged from Spain at UK rates – so that doesn’t work
Those are distance selling rules
Those arguing on here that the end of this tax dodge is a bad thing because their Xmas prezzies from Amazon might bet a bit more expensive are missing the point somewhat. The issue here is not a one-off issue of local tax avoidance per se but rather the entire global culture of tax evasion and secrecy that opresses millions of people all of the world and keeps entire countries in cycles of debt and poverty by undermining their tax base and stealing their natural resources.
The values are set – we hate injustice and opression and those who seek to undermine peace and democracy. The medicine might taste bad but without it there will be no cure. In the end we’ll all be better off…
Matt, you make a very good point. But how do you change a culture where tax evasion and tax avoidance is practised by the majority of the population, whether it’s buying CD’s from play.com, paying a plumber “cash-in-hand” or even tipping a taxi driver and not asking for the amount to be included on a receipt?
JJ Lehto
How do you change a culture where people lie, thieve and break the law?
Quite simple;
You prosecute them via the most non-discriminatory means possible.
And send them to jail if necessary.
MPs set a bad example — and some of them are now in jail.
Regrettably this is the only solution for major or persistent offenders.
But it must be done — and we must start now.
But we don’t agree that tax evasion is practiced by the majority of the UK population — only amongst the people you mix with perhaps?
@ PSG, you may move in different circles, but tax avoidance is everywhere. The abolishment of LVCR is a sure sign….why abolish if its everyday avoidance is not a problem! Also look up the study that looked at how many discarded cigarette packets at football grounds where found to be duty free.
If tax evasion is everywhere then so should HMRC.
Treble their staff, recruiting tough, intelligent officers who will hand out harsh fines and commence criminal prosecution where necessary.
Police State?
No: Just preserving the integrity of our country!
Richard has been rather quiet on the subject of the HMRC recently — but we are modestly confident that this would be his view as well.
I continue to say we need 20,000 tax officials in the UK
Nothing has changed my mind on that issue
@ PSG, I actually state in my post that avoidance is everywhere.
But evasion is also very prevalent as the black economy is huge. From waitresses not declaring their cash tips, to tradesman doing cash-in-hand jobs, to the smugglers bringing in cigarettes and booze from Europe. In times of economic hardship this likely to increase.
Obviously to combat this the HMRC should be better equipped. And surely one only needs to look at the problems in Greece caused in part by the large scale tax evasion of it’s population to see that increased investment into the HMRC is justified.
But my initial point was that tax evasion and tax avoidance is ingrained into our culture, and I see no evidence to disprove this.
I am not disputing with you on this one – our tax profession has helped ingrain tax abuse in our culture
The PSG needs to proceed with some delicacy here …
As some will know the PSG is composed of a group of pensioners living in Europe (outside of the UK).
In certain countries tax evasion (and not paying tax is “evasion” rather than “avoidance”) is a national hobby. Up to 50% of the population hardly pay any direct tax at all!
The “delicate” bit is in the theory that the UK joining the EU has produced an unfortunate copy-cat effect. Although the example set by the Crown Dependencies far out weighs any “European” influence.
The best and most pertinent comment of the day! (excluding Mr. Murphy of course)
Cut through the excuses, the whinging and the meowing
Tax Havens are a disgusting aberration and must be closed down.
Ten out of ten. Go to the top of the form
Fully agree.
Some of us tend to ignore the death and destruction caused by Tax Havens and only focus on the nearest material “things” in our own little lives.
1 billion people go to bed hungry every night —
And Tax Havens are one of the main causes.
PSG – I think you will find greed existed prior to Tax Havens, and will exist long after them. Like it or not this is a competitive world.
Oh no, competition is largely a myth
This is actually a highly cooperative world
I’m not saying competition does not exist
But it is the exception, not the norm
It’s dominance is just another economist’s fantasy
Competitive?
Like in a self-seeking, inconsiderate, greedy, materialistic, acquisitive and totally moronic?
We don’t think so.
There are some caring, human, considerate and very generous people out there. We mix with them every day.
Don’t judge others by your own peer group.
@PSG I was not. However, I wonder if those hundreds of thousands, perhaps millions of people competing to get jobs at the moment would take exception to your comments? Perhaps those training for the Olympics? The mothers comparing photographs of their children? Yes, life is competitive. Always has been and always will be.
Perhaps you live in a different world? I live in the real one.
Respectfully, as someone who has run companies and much more, you’re wrong
It is cooperation that makes the world go round
And competition is always tamed – and always has been, bu guilds, professions, unions, regulation and more, because we all know how harmful it is
If there was no-competition, then why did amazin and Play.com drive Vivazzi and Woolworths out of business? Why has Comet just been sold for £2?
Becasue compeeition from the internet retailers has driven prices down from consumers and forced uncompetitive busiess models out of business. Guilds and professional bodies stiffle competition, and make the consuemr pay more.
You cannot generate a generality from a particular
@PaulF
“Guilds and professional bodies stiffle competition, and make the consuemr pay more…. ”
Slightly off topic; but would you include the ICAEW the OECD and other “clubs” who (at times) appear only interested in protecting their rich and powerful members – the 1%?
At the expense of the 99%
Indeed
When purchasing something on Ebay the seller wrote “we are UK based and pay VAT, so we contribute to the country” I chose to purchase from the one who was paying VAT rather than overseas companies who I presume are not.
Ray
The real sad gits here are the couch potatoes whose motivations revolve around making a saving of a couple of quid on postal purchases of unnecessary electronic tat, which enables them to make further purchases of same. Empty lives and empty heads.
Roger Rabbit
The PSG is not famous for making diplomatic remarks – but your comment excels even our distaste for some modern convention and life-style. Like it.
Zaphod — “I think you will find greed existed prior to Tax Havens, and will exist long after them. Like it or not this is a competitive world.”
Quite right. We will likewise find that murder existed long before there were gangs, paedophilia long before there were internet rings & slavery long before there were snakeheads. Odd as you may find it, that doesn’t mean we tolerate them.
I don’t know what your point was but I think it needs pretty substantial reworking. Also,incidentally, there are not only “straights” between Morocco & Spain, there are, I’m sure, some Gays as well. Did you mean Straits ?
Any chance you could lean on the States of Jersey about regressive Social Security and Income Tax?
For the third year running I’m not entitled to public healthcare because I don’t earn enough. A friend of mine has just had to permanently leave the island as they were going to charge him for the full cost of the birth of his child, and all post-natal care.
I fear they are entirely indifferent to your needs
Pls talk to Geoff Southern…