Lawyers for the Channel Islands are heading to the high court this week in a last-gasp attempt to preserve the VAT loophole which exists in the region.
The Low Value Consignment Relief, which allows products priced £15 and below to be sold VAT free into the UK from the Channel Islands, is due to be closed next month after 30 years in existence.
It is particularly exploited by entertainment retailers, including HMV, Play.com and The Hut Group, which all have bases on the Islands.
Lawyers are seeking a judicial review according to The Observer, and claim removing the loophole will increase unemployment by 50% in Jersey.
Two of Jersey’s largest employers, Play.com and Indigo Starfish, Amazon’s main partner in the region, are carrying out “detailed business and logistics planning” ahead of a likely transfer to other tax havens, lawyers will claim.
The migration to other tax havens backs lawyers claims that the proposed measure will not have any material benefit to the UK.
The UK Treasury estimates the loophole is costing the exchequer £110m a year in lost tax.
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