Government moves to seal Channel Islands tax loophole

A tax advantage being used by major retailers such as
Tesco and
Amazon is to come under
the spotlight, ministers have said. 

The practice, which involves using distribution centres based in the tax
haven of the Channel Islands to sell goods such as CDs and DVDs effectively
VAT-free to online customers, has sparked protests from smaller competitors.

On Jersey and Guernsey, no VAT is charged on goods costing less than £18 that
are imported to mainland UK. Objectors believed this gives the larger companies
an unfair advantage in being able to source their products.

After backbench ministers waged a campaign to cancel the arrangement,
general Dawn
said last week that the government was deciding whether to cut the
tax-free threshold from £18 to £7.

This would cut out the benefits for larger companies on most imported CDs and

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