Cheap Blu-ray Channel Islands VAT Loophole Closed From 2012

By Gary Cutlack on at

All those packages you get from Jersey and Guernsey will soon cost a bit more, thanks to the government giving in to EU demands to stop businesses in the Channel Islands skipping charging VAT on small purchases.

Currently, any company that can convince the tax man it's based in the Channel Islands can avoid charging its customers VAT on transactions below £18, due to the Low Value Consignment Relief system -- which, when it was introduced back in 1983, was designed to cut out the admin costs incurred when collecting tiny amounts of VAT on small transactions.

Obviously the internet ruined all that, with the likes of Play.com setting up out there and hammering UK-based businesses by undercutting them by 20 per cent, flogging cheaper CDs, DVDs and Blu-rays and posting them out from the islands.

The EU recently ruled this was uncompetitive and abusive, and ordered the UK government to stop letting it happen. So it's going to stop, from April 1st 2012. [Telegraph]