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HMV Vacates Guernsey After Removal Of UK LVCR

by Jason Gorringe,Tax-News.com, London

09 August 2012


British high street retailer HMV has decamped from Guernsey following the removal in April of a long-standing generous tax concession which exempted low value exports to the UK market from value-added tax (VAT).

'Low-Value Consignment Relief' has historically allowed goods imported from non-European Union (EU) territories to be sold free from VAT in the UK market, provided they are priced at less than GBP15 (USD23). However, from April 1, 2012, the United Kingdom controversially removed the exemption for the Channel Islands despite it being retained for other non-EU nations.

In March 2012, the Channel Islands tried unsuccessfully to challenge the UK's decision in the courts. They then decided not to appeal against the adverse High Court ruling on the basis that any outcome of an appeal would likely take too long to salvage the islands' fulfilment industries.

HMV is one of a substantial number of companies lured to Guernsey by the incentive that have finalised the closure of their island operations. Eventually the removal of LVCR is expected to decimate the two islands' fulfilment industries, which had attracted industry-leading giants, such as Tesco, Amazon and Play.com.

The closure of HMV's Guernsey warehouse, established in 2006, will cost the island 46 jobs. The company is to transfer its Guernsey operations to its existing UK distribution centre in Merlin Park, Birmingham.

TAGS: court | compliance | tax | business | tax compliance | tax avoidance | fiscal policy | law | international financial centres (IFC) | Guernsey | United Kingdom | offshore | tax planning | retail | European Union (EU) | Europe

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