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
MTD represents 'the single most significant change to the UK’s system of taxation in recent times', says Knill James partner Nick Rawson. So, how prepared are SMEs for digital tax reporting?
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Unincorporated businesses under the VAT threshold given an extra year to prepare before MTD becomes mandatory