Treasury to close loophole that allows VAT-free DVDs

[Sin_Chase]

how will they? the people who bought from jersey are just going to stop buying products now? dont make me laugh

They have not lost £140million.

The LVCR has been around for years, they knew about it, lowered the amount before closing it and only now decided to shut it off entirely.

Do not sit there and act like it was money that was being shiftily bled from the Government because it was not.

And remember - Jersey eventually only allowed Jersey owned business to make use of the LVCR, UK owned businesses could not operate out of Jersey.

It was introduced for a reason, that being the speculated cost of collecting small sums of Tax in the longrun. They want to close it now because of the volume of items and the potential tax that could be claimed. Once closed that volume will shrink back to levels where LVCR was introduced because of the cost-to-collect considerations.

They have not lost £140 Million and they do not stand to gain it either. Fulfilment will sod off elsewhere and the UK can pay to collect low Tax amounts from low volume shipment. Play.com sold up MONTHS ago, why do you think fulfilment will hang around now, pay higher wages (Hello cost of living in Jersey), higher shipment, higher premises overheads etc etc? Hint - They will not.

 

[Dave M]

Additionally, where does everyone expect all the Polish and Portuguese workers who fill a large portion of these jobs in the Channel Islands to go? I can tell you they certainly won't be staying here, there are no jobs (and soon to be even less), and I highly doubt they'll head back home. You've just emptied 1000 new immigrants and their 3-4 member families in to your country and on to your benefits system.

If they can and would why not do it last year? Oh because they had a job in Jersey. Now that job is in the UK and they will come to the UK.

Not only do we get the VAT from the sales but we get the PAYE of the person employed in the UK, they spend their money in the UK which generates more VAT, more PAYE, more business rates.

The UK benefits, Jersey loses.

 

[Dave M]

Fulfilment will sod off elsewhere

Where else, outside of the UK and EU, does it cost 37p to send a DVD to any UK address?

 

[Sin_Chase]

If they can and would why not do it last year? Oh because they had a job in Jersey. Now that job is in the UK and they will come to the UK.

Not only do we get the VAT from the sales but we get the PAYE of the person employed in the UK, they spend their money in the UK which generates more VAT, more PAYE, more business rates.

The UK benefits, Jersey loses.

Because said workforce present no additional strain on the benefits system..........good luck!

I actually could not care less, does not affect me at all. Fact is the UK have not lost £140 Million and whether they stand to gain every sale made from the CI in the UK instead is sheer speculation at best.

 

[Glaucus]

Where else, outside of the UK and EU, does it cost 37p to send a DVD to any UK address?

So this. People say they will go, but where.
Low cost items need low cost shipment. Especially as supermarkets are so cheap on such items these days. They are likely just to move back to the uk, to a cheaper land/wage area.

 

[Sin_Chase]

The question you need to ask is this - Is there more fat from which to eat into to cover additional postage from another region and still beat out UK operations?

It's not like the CI is a super low wage, low cost of living 'sweatshop' region. It's just not. It's not the comparably cheaper postage that is making or breaking the margins, is it?

 

[md85]

If they can and would why not do it last year? Oh because they had a job in Jersey. Now that job is in the UK and they will come to the UK.

Not only do we get the VAT from the sales but we get the PAYE of the person employed in the UK, they spend their money in the UK which generates more VAT, more PAYE, more business rates.

The UK benefits, Jersey loses.

Some of that's true, but for every one member of an immigrant family in Jersey, the other two or three probably don't work (generalisation, but in a lot of cases it is true), they leech of our ridiculous benefits system instead. Regardless though, those jobs that were in Jersey aren't now in the UK. Play are in Belgium, Amazon moved to Switzerland. The people who filled those jobs aren't going to those places, they can't speak the languages and have little desire to learn them. They're either staying here or moving to the UK.

It's neither good for Jersey or the average UK citizen. Will OcUK or other UK e-retailers be lowering their prices due to the new business they'll gain when Play, MyMemory and so on stop selling from here? Will UK fulfilment wages rise? Will Royal Mail lower the postage prices because they have more business (assuming of course these companies decide to move to the UK)? I doubt it, it's just more profit for the highups.

 

[Dave M]

Because said workforce present no additional strain on the benefits system..........good luck!

What has this to do with tax avoidance? A coal mine in Poland could close and the same (weak) arguments could be made.

Fact is the UK have not lost £140 Million

It's not a fact? Okay, so what is? Tell us how much tax revenue the UK has lost out on due to this loop hole in the last 12 months.

whether they stand to gain every sale made from the CI in the UK instead is sheer speculation at best.

It's only sheer speculation if you also believe your reasonable expectation to get paid next month is also sheer speculation. That would be a very peculiar definition.

 

[scorza]

Where else, outside of the UK and EU, does it cost 37p to send a DVD to any UK address?

Isle of Mann? Ireland maybe - I wouldn't put it past them to reduce VAT on CDs and DVDs to 0% which is allowed under EU rules.

 

[Sin_Chase]

It's only sheer speculation if you also believe your reasonable expectation to get paid next month is also sheer speculation. That would be a very peculiar definition.

What kind of a weak comparison is that?

Purchase decisions can quite easily be based on price. Speculation - A purchase that would have been made at £15 from the CI would also be made at £18 from the UK.

How is the above in any way comparable to me getting paid £X for Y Hours work at £/Hour.

 

[Dave M]

Isle of Mann? Ireland maybe - I wouldn't put it past them to reduce VAT on CDs and DVDs to 0% which is allowed under EU rules.

Isle of man has completely different VAT arrangements with the UK so would be a no-go and Ireland doesn't have royal mail 2nd class delivery so wouldn't be cost effective (even if Ireland was so crazy as to try it).

 

[Dave M]

What kind of a weak comparison is that?

The same as your weak argument

How is the above in any way comparable to me getting paid £X for Y Hours work at £\Hour.

You're assuming your company is still in business, an assumption many people in Jersey won't be making for much longer.

 

[Sin_Chase]

Because external factors affecting purchasing decisions are closely related to the ones that might affect a business operation.

Do continue to pedal your cut and dry math though, if it's comparable to the kinds of people making these decisions it might explain a lot.

"Right...X number of sales were made under LVCR representing a potential Tax payment of £Y. This means when we close it off all those sales will occur from a region that attracts the full 20% Tax payment and we make £140 Million!!!! YAAAAY"

I actually could not care less, no skin of my nose, affects me not. Singing to the tune of "We are £140 Million better of next year" is retarded however.

 

[scorza]

Isle of man has completely different VAT arrangements with the UK so would be a no-go and Ireland doesn't have royal mail 2nd class delivery so wouldn't be cost effective (even if Ireland was so crazy as to try it).

The thing you under-estimate is that if there's a guaranteed number of similar sized packages crossing from Ireland into the UK then the price you for delivering it becomes even cheaper - especially as you can force the Royal Mail to do the difficult work for you.

 

[Vonhelmet]

Isle of Mann? Ireland maybe - I wouldn't put it past them to reduce VAT on CDs and DVDs to 0% which is allowed under EU rules.

This has nothing to do with the VAT rate in those countries and everything to do with the level below which the UK does not charge VAT on imports.

 

[scorza]

This has nothing to do with the VAT rate in those countries and everything to do with the level below which the UK does not charge VAT on imports.

Erm exactly? They'll still be able to get round UK VAT by exporting CDs and DVDs from non-CI countries.

 

[Sin_Chase]

Too many variables to speculate. Jersey has huge benefits to a company from a taxation point of view. Would not know where to start when looking at the prospect of operating in another LVCR region and be able offset additional postage costs with lower operational costs. (Other than Tax breaks and reasonable postage to the UK I cannot see what else Jersey has to offer - High cost of living, RIDICULOUS land cost etc)

As I asked earlier - Is postage making and breaking the margins?

No doubt these companies have already been looking into it for some time. (Or at least should have!)

 

[Biohazard]

HMRC is actively engaged in trying attain bilateral tax arrangements pretty much everywhere I believe. Not all at once, not all will be possible I suspect, but try they will anyway. There has been significant activity in this respect over the last few years.

 

[Vonhelmet]

Erm exactly? They'll still be able to get round UK VAT by exporting CDs and DVDs from non-CI countries.

And then we'll clamp down on those as well...

EDIT: My next point was rubbish.

 

[Vonhelmet]

HMRC is actively engaged in trying attain bilateral tax arrangements pretty much everywhere I believe. Not all at once, not all will be possible I suspect, but try they will anyway. There has been significant activity in this respect over the last few years.

Liechtenstein was a huge deal, and they're making serious inroads into Switzerland.