Hundreds of UK-based resellers of low-value IT kit are set to benefit after the Channel Islands lost their judicial review against ending Low-Value Consignment Relief (LVCR).
The ruling means that as of 1 April, sub-£15 internet mail order goods from Jersey and Guernsey will no longer be exempt from VAT, ending a loophole that has led the Channel Islands fulfilment industry to thrive in recent years.
Over the three-day judicial review, UK-based traders successfully convinced the judge that the relief gave firms in the Channel Islands an unfair advantage.
One mainland-based memory supplier ChannelWeb contacted earlier this week threatened to abandon the IT market altogether if the governments of Jersey and Guernsey had successfully overturned the ruling.
The Channel Islands argued its abolition would be unlawful and discriminatory and would damage its economy.
According to an article on The Telegraph, David Vaughan QC, on behalf of Jersey, voiced fears that the legislation might lead "to the whole trade leaving and going to Switzerland or some other place" outside the EU.
However, Chris Holgate of printer cartridge e-tailer Refresh eCommerce – which is one of many mainland-based resellers that have been involved in the campaign to end LVCR – was convinced otherwise.
"I do not believe the whole industry is going to move to Switzerland," he told ChannelWeb.
"The government will apply this to anywhere else it sees LVCR being abused through circular shipping.
"Although I am sorry for the people who will lose their jobs, the damage to the UK has been worse," he added.
Last year, the government estimated that the cost of LVCR to the exchequer had risen from £85m to £30m over the previous five years.
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