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Notorious loophole blamed for crushing small business

Channel islands VAT loophole to be closed

The Government has closed the VAT loophole that allowed companies to avoid paying tax on certain mail order deliveries

According to the BBC, the move will take effect from April 1st next year and addresses the Low Value Consignment Relief, which affects all packages worth less than £15 dispatched from the Channel Islands.

The loophole meant that a number of online and supermarket retailers based their storage and postage operations in the channel islands, and in turn gave them additional space to undercut any rivals based on the mainland.

“These reforms will ensure that UK companies, especially small and medium sized enterprises, can compete on a level playing field with those larger companies with the resources to set up operations in the Channel Islands,” said Treasury Minister David Gauke.

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