All material subject to strictly enforced copyright laws. © 2022 ITR is part of the Euromoney Institutional Investor PLC group.

Channel Islands lose LVCR High Court battle

channel-islands.jpg

The Channel Islands have today lost their battle to overturn the UK government’s decision to block low value consignment relief (LVCR).

This week the UK High Court heard a judicial review of the case, which related to the islands benefitting from this VAT exemption, and ruled that the proposed changes to LVCR are compliant with EU VAT law

The UK chancellor is expected to formally announce the end of LVCR in next week’s budget.

This will mean that from April 1, it is anticipated that VAT of will be applied to all commercial consignments from the Channel Islands, regardless of value.

Mr Justice Mitting told Jersey and Guernsey they could appeal the decision to a higher court.

“I am extremely disappointed at this outcome and we will now be considering whether to lodge an appeal,” said Alan Maclean, Jersey’s Economic Development Minister. “The changes, which are targeted against the Channel Islands alone, create an uneven playing field. We know that some businesses will find it difficult to compete under these circumstances and as such, jobs are likely to be lost

LVCR was established under EU law in the 1980s to exempt low value goods purchased and imported outside the EU from VAT, to cut the administrative costs associated with collecting small amounts of the tax.

However, companies such as Amazon and HMV set up offshore mail-order operations in Jersey and Guernsey – which are not part of the EU – to exploit the VAT relief loophole.

Click here to find out how Channel Island companies will continue to take advantage of the exemption.

FURTHER READING:

Why HMV and Channel Islands’ resistance to scrapping tax relief is futile

UK TREASURY: Why the VAT relief must end

More from across our site

Japan reports a windfall from all types of taxes after the government revised its stimulus package. This could lead to greater corporate tax incentives for businesses.
Sources at Netflix, the European Commission and elsewhere consider the impact of incoming legislation to regulate tax advice in the EU – if it ever comes to pass.
This week European Commission officials consider legal loopholes to secure minimum corporate taxation, while Cisco and Microsoft shareholders call for tax transparency.
The fast-food company’s tax settlement with French authorities strengthens the need for businesses to review their TP arrangements and documentation.
The full ALP model will be adopted through a new TP regime, which is set to boost the country’s investments and tax certainty.
Tax professionals have called on the UK government to reconsider its online sales tax as it would affect the economy at the worst time.
Tax professionals have called on companies to act urgently to meet e-invoicing compliance targets as the EU plans to ramp up digitisation.
In the wake of India’s ambitious 25-year plan for economic growth, ITR has partnered with leading tax commentators to discuss what the future will look like for India and for the rest of the world.
But experts cast doubt on HMRC's data and believe COVID-19 would have increased the revenue shortfall.
EY’s plan to separate its auditing and consulting businesses might lessen scrutiny from global regulators, but the brand identity could suffer, say sources.
We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree