By Marcus Leach

News that the government have announced plans that will stop retailers avoiding paying VAT by procuring goods from the Channel Island may result in consumers looking elsewhere for cheap deals, according to Kevin Flood of Shopow.

This tax oversight has been used more frequently by retailers selling CD’s and DVD’s online. This loophole was costing the government £140 million a year.

Low Value Consignment Relief (LVCR) will not apply to goods sent from the Channel Island to the UK from the 1st April. LVCR set up for tax exemption purposes for goods coming from outside the European Union so that they could avoid paying small amounts of tax, as collecting it would cost the more.

“There has been an unprecedented movement of demand from consumers for cheap goods such as CD’s and DVDs online, fuelled by the downturn in the economy and lagging disposable income. The closing of the VAT loophole could force British consumers to look further afield for cheap deals,” Flood said.

“The closing of the VAT loop hole is good news for traditional British high street retailers such as HMV and Waterstones, who have come under fierce pressure from Channel Island registered online retailers, whose sales models have been taking advantage of the loophole in the VAT rules to offer cut price goods to British consumers. The situation is not at all good however for the run of the mill British consumer, who will quite literally pay the price.”

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