The End Of Cheap Jersey Goods??
Posted: 13 Mar 2011, 15:34
Nicked from elsewhere...
It's beginning to look as though the writing is on the wall for the Channel Islands based mail order businesses.
The background:
The Channel Islands, whilst geographically very near to the UK, are outside of the European Union but also have a special Customs relationship withthe United Kingdom as they are what is known as a Crown Peculiar. They also share English as a common language and use the Pound Sterling as currency and goods from the Islands are not subject to Duty.
All goods imported into the European Union are subject to import charges in the form of Duty and VAT. However, under European Directive, all Member States have to provide Low Value Consignment Relief (LVCR); this means that individual consignments below a given value are exempt from charges. The objective was to prevent national Customs from being clogged up trying to administer many small items, also the admin costs usually outweigh revenue raised on low-value items. The Directive establishes minimum and maximum LVCR rates, these being 10 and 22 euro. A Member State can set LVCR as it pleases, between these values. The UK chose to adopt the maximum although many others chose the minimum.
These factors combined mean that it is commercially viable to adopt a circular trade, whereby goods are exported on a commercial basis to the Islands and then exported in the form of mail order packages under the LVCR threshold. Essentially, it is a mechanism whereby goods are made available to UK shoppers without VAT.
UK based retail stores have been agitating for some while to have this 'loophole' closed. They have become more strident since a lot of stores (such as Amazon and Tesco) have opened fulfillment centres specifically to take advantage of it (as opposed to Play, for example, who are solely based in Jersey).
The Treasury, under Labour, was disinclined to take action. But it seems that George Osborne is about to grasp the nettle - the matter was raised in the Lords recently and it was stated that ministers hoped to make an announcement in the Budget.
There are several things he could do. The easiest and cheapest would be to lower the LVCR threshold to the minimum (10 euro, about £8.50). This would place many more items in the 'net', killing a lot of the trade of the likes of Tesco. It would also impact Play - but they do have an arrangement whereby they pre-pay VAT charges should they be due. They would obviously be paying much more often than now.
Also possible, but less likely due to the confusion, disruption it and administrative costs it would cause would be to exempt mail order items from the LCVR tax relief. It is possible to do this on either specific goods, or those originating from a particular territory although it must be shown that it is being doing for objective reasons (eg, stopping tax avoidance) and is not discriminatory.
This is what Finland did, when presented with a similar problem regarding the Aland Islands.
Lastly, it is possible to adopt a similar measure, but at EU level.
The upshot is, I think that CD's and DVD's coming from outside the UK are about to get quite a bit more expensive. At the very least, to stop Customs charges, you'll need to keep them under £8, not £18...
It's beginning to look as though the writing is on the wall for the Channel Islands based mail order businesses.
The background:
The Channel Islands, whilst geographically very near to the UK, are outside of the European Union but also have a special Customs relationship withthe United Kingdom as they are what is known as a Crown Peculiar. They also share English as a common language and use the Pound Sterling as currency and goods from the Islands are not subject to Duty.
All goods imported into the European Union are subject to import charges in the form of Duty and VAT. However, under European Directive, all Member States have to provide Low Value Consignment Relief (LVCR); this means that individual consignments below a given value are exempt from charges. The objective was to prevent national Customs from being clogged up trying to administer many small items, also the admin costs usually outweigh revenue raised on low-value items. The Directive establishes minimum and maximum LVCR rates, these being 10 and 22 euro. A Member State can set LVCR as it pleases, between these values. The UK chose to adopt the maximum although many others chose the minimum.
These factors combined mean that it is commercially viable to adopt a circular trade, whereby goods are exported on a commercial basis to the Islands and then exported in the form of mail order packages under the LVCR threshold. Essentially, it is a mechanism whereby goods are made available to UK shoppers without VAT.
UK based retail stores have been agitating for some while to have this 'loophole' closed. They have become more strident since a lot of stores (such as Amazon and Tesco) have opened fulfillment centres specifically to take advantage of it (as opposed to Play, for example, who are solely based in Jersey).
The Treasury, under Labour, was disinclined to take action. But it seems that George Osborne is about to grasp the nettle - the matter was raised in the Lords recently and it was stated that ministers hoped to make an announcement in the Budget.
There are several things he could do. The easiest and cheapest would be to lower the LVCR threshold to the minimum (10 euro, about £8.50). This would place many more items in the 'net', killing a lot of the trade of the likes of Tesco. It would also impact Play - but they do have an arrangement whereby they pre-pay VAT charges should they be due. They would obviously be paying much more often than now.
Also possible, but less likely due to the confusion, disruption it and administrative costs it would cause would be to exempt mail order items from the LCVR tax relief. It is possible to do this on either specific goods, or those originating from a particular territory although it must be shown that it is being doing for objective reasons (eg, stopping tax avoidance) and is not discriminatory.
This is what Finland did, when presented with a similar problem regarding the Aland Islands.
Lastly, it is possible to adopt a similar measure, but at EU level.
The upshot is, I think that CD's and DVD's coming from outside the UK are about to get quite a bit more expensive. At the very least, to stop Customs charges, you'll need to keep them under £8, not £18...
while that's not as bad as the £8 mooted,importing from the usa is now going to be even more prohibitively expensive.
. What's your source please?
very few that I want apart from a few Criterions at the moment (which I am waiting to see how their UK couterparts turn out before bothering). Well until I see a few I want cheap