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,
Primarolo 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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