In response to Trevor, I think we just differ on the definition of the word abuse in this context. Many of us aren't saying that the sale of flowers, cream and the such from Jersey to the UK mainland is an 'abuse' of LVCR.
The abuse comes as LVCR is mainly applied in The Channel Islands to goods that have been deliberately exported to the Channel Islands from the EU in bulk so that they can be reimported individually back in to the EU in order that the retailer can take advantage of the VAT relief. This practice is an abuse of the EU tax system in that its essential aim is to gain tax relief contra to the intent of European Directives covering LVCR. The LVCR Directive was not drafted to give retailers a VAT advantage in the internal EU market.
In the 2006 a major European VAT abuse Judgement won by HMRC and called Halifax, defined VAT abuse as transactions that :
“notwithstanding formal application of the conditions laid down by the relevant provisions of the Sixth Directive and of national legislation transposing it, result in the accrual of a tax advantage the grant of which would be contrary to the purpose of those provisions. Second, it must also be apparent from a number of objective factors that the essential aim of the transactions concerned is to obtain a tax advantage.”
In other words if the main purpose of carrying out a transaction is to gain a tax relief and if that transaction results in a tax relief that is contrary to the intention of the legislation surrounding that tax relief, then that transaction could be seen as an abuse.
The standard response from the Treasury is that nothing can be done to prevent Channel Island companies from taking advantage of LVCR however many would argue that LVCR Abuse is the main problem rather than LVCR itself. Fortunately there are many things that the government can do immediately to restrict the revenue lost to LCVR and prevent altogether what many would term as 'abuse' that is hurting so many mainland based companies that either don't have the ability or the desire to relocate to the Channel Islands.
For further reading I would recommend the following resource:
My answers
LVCR
In response to Trevor, I think we just differ on the definition of the word abuse in this context. Many of us aren't saying that the sale of flowers, cream and the such from Jersey to the UK mainland is an 'abuse' of LVCR.
The abuse comes as LVCR is mainly applied in The Channel Islands to goods that have been deliberately exported to the Channel Islands from the EU in bulk so that they can be reimported individually back in to the EU in order that the retailer can take advantage of the VAT relief. This practice is an abuse of the EU tax system in that its essential aim is to gain tax relief contra to the intent of European Directives covering LVCR. The LVCR Directive was not drafted to give retailers a VAT advantage in the internal EU market.
In the 2006 a major European VAT abuse Judgement won by HMRC and called Halifax, defined VAT abuse as transactions that :
“notwithstanding formal application of the conditions laid down by the relevant provisions of the Sixth Directive and of national legislation transposing it, result in the accrual of a tax advantage the grant of which would be contrary to the purpose of those provisions. Second, it must also be apparent from a number of objective factors that the essential aim of the transactions concerned is to obtain a tax advantage.”
In other words if the main purpose of carrying out a transaction is to gain a tax relief and if that transaction results in a tax relief that is contrary to the intention of the legislation surrounding that tax relief, then that transaction could be seen as an abuse.
LVCR
The standard response from the Treasury is that nothing can be done to prevent Channel Island companies from taking advantage of LVCR however many would argue that LVCR Abuse is the main problem rather than LVCR itself. Fortunately there are many things that the government can do immediately to restrict the revenue lost to LCVR and prevent altogether what many would term as 'abuse' that is hurting so many mainland based companies that either don't have the ability or the desire to relocate to the Channel Islands.
For further reading I would recommend the following resource:
http://www.vatloophole.co.uk/what-can-be-done/