The Low Value Consignment Relief for the Channel Islands is to be scrapped completely, after already being cut from £18 to £15 on November 1, in a move that is reckoned to end an anomaly that has been costing the VAT man around £140m a year.
The reasoning behind LVCR was that the VAT collected on goods of such low value amounted to just a few pence and cost more to collect than was worth it. Quick to spot a retail advantage however, some of the big players, like Tesco, Play.com and Amazon realised that they could ship goods that sold under the threshold – things like CDs and DVDs – out to Jersey and Guernsey, cut the VAT off the price and send them back individually to consumers in the UK.
Level playing field
Obviously, if you had a small or medium-sized business in this market you couldn't really compete with this approach but as from April 1 next year, the playing field will be just that little bit more level.
The problem here is that while the LVCR is no longer applicable for goods from the Channel Islands, it still applies elsewhere in Europe so maybe the problem will just shift elsewhere. I'm sure there are plenty of friendly countries eager to get the business.
Look out for your next parcel of CDs shipped direct from Estonia!