Friday, March 16, 2012

Victory for tax justice as UK court rules VAT loophole must go

From the Telegraph:
The Channel Islands have lost their judicial review against the end of Low Value Consignment Relief (LVCR).
This system has exempted from Value Added Tax (VAT) any import from outside the EU below a threshold value, allowing firms in the Channel Islands to charge less for small items. This gave them a competitive advantage over mainland UK firms which had nothing to do with productivity or efficiency, but was simply due to their ability to dodge taxes. Many, many small UK retailers were killed as a result of this. In the words of the business campaign group RAVAS (Retailers Against VAT Avoidance Schemes:)
"UK retailers have been seeking an even playing field but have been competing with supplies from the Channel Islands with one hand tied behind their back."
Congratulations to Richard Allen and RAVAS for their successful challenge. The tax haven abusers may still appeal, but let's hope the dam holds. Allen told TJN this morning:
"I think the RAVAS evidence of abuse shot away their credibility. They really put up a fight to keep us out and they lost once we got in. I never thought something so intrinsically dull could be so exciting. Yesterday was better than a rock concert!"
The European Commission had a hand in ending the abuses, forcing the British government's hand, it seems, after years of acquiescence. The Guardian adds:
The ruling marks the end of years of campaigning by the Guardian and scores of UK retailers, including the music chain Fopp and the healthfood group Holland & Barrett. They had repeatedly told the Treasury they were unable to compete with VAT-free prices online, but were repeatedly brushed aside.
The BBC in Guernsey, true to form, seems rather unhappy at the prospect of an end to the abuse.

The tax havens are considering an appeal. Let's hope they consider it not worth their while instead. The abuse is plain, and it plainly needs to be stopped. A last word to the indefatigable Richard Allen:
"The long-term and blatant abuse has destroyed many UK businesses which, other than for the lack of a 20% trading advantage, would have been viable healthy operations giving people jobs and generating tax revenue in the UK.

"While of course we have sympathy for the effect on employment in the Channel Islands that the closure of this industry will have, it is for the people of the Islands to strongly question their elected representatives as to how they could possibly allow an industry that was based on the abuse of tax to become so important to their economy."

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