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Healthspan challenges LVCR rule change

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15th Nov 2011
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Healthspan, a Guernsey health supplement company, is to launch legal action against the UK government for its decision to end VAT relief on low value goods exported from the Channel Islands to the UK.

Derek Coates, the group's chief executive, stated he will launch the challenge following consultation and legal advice from two leading accountancy firms and UK lawyers "on the basis of discrimination against the Channel Islands". 

The Treasury announced last week that on 1 April it will close the Low Value Consignment Relief (LVCR) VAT loophole that allowed retailers to avoid paying tax on goods below £15 to 'end exploitation of the rules’.

The loophole will still be available to companies based in Switzerland, Cyprus and Hong Kong.

Coates added: "What is surprising and disturbing for all the Channel Islands is the way the UK have treated our islands with such disdain and implemented a decision in such a discriminatory manner, singling out the Channel Islands in isolation.

"It must be understood that they have taken no steps to stop LVCR imports from any other country outside the EU including Switzerland, Cyprus, Hong Kong, the USA or China. In that respect we are likely to see many companies moving their distribution functions to those jurisdictions."

The government stated that the loophole, which allowed larger companies such as Tesco and Play.com to sell cheap DVDs, cost £140m a year in tax relief. 

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