Jersey Adopts the Ostrich Position on VAT Scam

Earlier this morning we blogged the announcement by the UK government that it will be withdrawing the special Low Value Consignment Relief concession with effect from April 2012.

In response, the Jersey government has issued the following press release which, amongst other things, talks about taking legal action against this decision.

TJN and others have been saying for years that the Channel Island based fulfillment industry is built on a tax abuse which must be closed to reduce harmful market distortions. Now the local politicians call foul and want to take legal action against the UK government's decision. Are they clueless or what?

Press release from the States of Jersey

09 November 2011

The Minister for Economic Development has expressed his disappointment at the UK Treasury’s announcement that from 1 April 2012 Low Value Consignment Relief (LVCR) will end for all goods imported into the UK from the Channel Islands.

The announcement means that all such goods, regardless of value, will be subject to UK VAT at 20%.

Senator Alan Maclean says work has been underway for some time on this issue and a ministerial task force, chaired by the Chief Minister, has been co-ordinating action across government.

It has been working on 3 complementary strategies:

1. political and potential legal engagement with the UK government over the policy decision itself
2. working with those in the industry to help retain fulfilment businesses operating in Jersey
3. developing a contingency plan in case some jobs are lost as a result of the uncertainty over future arrangements for the industry

Senator Maclean said “The change will affect hundreds of livelihoods across the Island and in view of this impact, we are taking legal advice in conjunction with members of industry. We would not want discrimination against the Channel Islands to go unquestioned, when it has the potential for a severe impact on Islanders.”

Contingency plan

Ministers have been working on a contingency plan in case the fulfilment industry is left unable to fully compensate for the resulting losses. Existing initiatives to support Islanders who are seeking work will be expanded: schemes like Advance to Work, through which 238 young people have found employment, and Advance Plus, which has found jobs for 81 long term unemployed.

A team from the Economic Development and Social Security Departments is working with employers to ensure that opportunities for local job seekers are maximised, by ensuring that local residents have the right skills to be first in line for the available jobs.

The Social Security Minister, Deputy Ian Gorst, Said “We will be liaising with major employers in Jersey’s hospitality, retail, agriculture and construction sectors. These sectors employ a significant number of staff and we need to determine the specific skills applicants need to fill upcoming vacancies.

“The Skills Executive has commissioned the Skills Board to work with the Education Department to examine the training needs of those who may lose their jobs and to recommend what additional capacity is needed at Highlands College and elsewhere.

“As the department is notified of job vacancies, a team will be contacting employers with lists of suitable candidates who are registered as unemployed with 5 or more years of residency, in order to enhance the prospect of locals securing jobs.”

E-commerce sector

Senator Maclean added “Online sales are an important part of Jersey’s e-commerce sector. Its companies employ more than 700 people, the majority of whom are locally qualified. This business also produces significant revenue for Jersey Post and other postal operators.

“We need to work with the industry and its employees to minimise the impact of the UK Government’s announcement on our e-commerce sector and on the people who work within it.”