Four years ago Jersey threw Tesco’s CD/DVD website sales operation out claiming it was operating a ‘sham’ selling structure, which brought Jersey into disrepute.
At the time Tesco was, according to the then development minister Philip Ozouf, like other companies, using the island as a postbox for business. The purchaser and seller remain in the UK with items being shipped to the Island to then be re-imported purely to avoid VAT. In response Jersey implemented a new licensing procedure to crack down on these types if deals.
According to the Guardian, Tesco has recently reopened this avenue of operations but now uses Guernsey as the base, although it trades as Tesco (Jersey) Ltd. Until recently it had used ‘TheHut.com’ to do this for them. Last year, Treasury minister Stephen Timms said “Guernsey has made it clear to a number of UK companies involved in music retailing, including those that have been forced to close their Jersey operations, that it does not wish to see them establish activities on the island.”
The UK Government considered bringing in tax changes to close this loophole in 2006, but this proposal it appears was never followed through with. At the time the dodge was thought to cost the exchequer (taxpayer) £85 million a year. In 2010 it became £110 million.
Tesco has, according to the Guardian report, stated that all the saving made from the lack of VAT charges are passed on to the customer.
Although possibly embarrassing it is not as far as I can see illegal. It could therefore be argued that while the loophole exists then why should it not be exploited? After all, it is the ordinary purchaser that benefits in the form of lower prices. But that leaves out the question of the smaller competitor that cannot compete in this way and the fact that Tesco profits are boosted by pure scale. Not to mention that taxes have to be raised in other quarters to fill the gap.
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Tags: channel islands, guernsey, jersey, News, Tesco, thehut, vat
It is not illegal. It is a perfectly legit operation which follows the rules.
Why is it that in this country doing legitimate work and minimising your tax bill is seen as underhand.
It should be classed as a public service keeping money out of Gordos hands. He will just use it to leverage another loan and put us furtherinto debt.
Personally, If I new anyone who was fiddling their taxes I would wish them luck. It’s the land of the criminals now.
Got me there Lord T.
Its a legal tax relief for genuine imports being abused. Of course its illegal. The stuff cming in was exported and reimported. You can’t buy UK DVDs outise the UK as they have to be certified. But with the idiots we have at HMRC in the UK what chance do we have of it being dealt with….
Abused?
In your opinion. It is perfectly legitimate. It is not illegal.
Personally, I think paying tax to the monstrosity that is the UK government is abuse of our good nature.
Abuse is legally defined in EU law. Idiot.
To elaborate on Abuse, its using a Directive (thats a law) for a purpose for which it was not intended. If you knew anything about this which you clearly don’t and if you had actually read the laws covering the directive that governs this relief (LVCR) sending stuff to some Island to then have it sent back to claim the releif is clearly an abuse. So a bowler hat and a smug grin doth not a wise man make I’m afraid…back to school.
You could be right in that the EU has classed this as abuse but we live in a country that, so far away, following the law is not illegal no matter what the original intent is.
If they wanted to exclude this use they should say so.
This is the law of unintended consequences.
When tax bills go up 1% and people stop working overtime to avoid paying extra taxes and the tax take goes down. Is that abuse?
Following the rules but not the intent. The story of an oppressed nation.