Channel Islands VARs come back to Blighty

IJT Direct and Choice Stationery Supplies move operations back to Somerset as VAT loophole abolition date nears

Multiple IT resellers have moved or are moving operations back to the UK after the Channel Islands failed to overturn the decision to abolish Low-Value Consignment Relief.

Last decade, scores of suppliers of sub-£18 IT goods such as memory cards and printer cartridges established operations in the British Crown Dependency to avoid paying VAT on shipments to UK customers.

But the tax loophole will close on 1 April, after the government of Jersey and Guernsey's last-gasp attempt to reverse the decision failed.

Taunton-based printer cartridge specialist Choice Stationery Supplies told ChannelWeb it has moved all its warehousing back to Somerset, effective last week. It had fulfilled orders for smaller items such as printer inks and toners from Guernsey since 2008.

Bentham Ltd, a Taunton-based printer cartridge and flash memory supplier which set up shop in the Channel Islands in 2006, confirmed it too will repatriate one of its businesses – IJT Direct – before 1 April.

In a post on its website, HMRC has warned that it will move to snuff out LVCR "abuse" if it finds evidence the practice has simply been displaced to other non-EU territories. Switzerland and Norway have been mooted as possible alternative host countries for mail order suppliers hit by the change.

Despite this, Anthony Moxon, owner of Bentham Ltd, said he is still considering the options for some of his other more price-sensitive businesses which sell through Amazon and eBay.

He questioned whether HMRC would have the clout to follow through on its threat.

Moxon told ChannelWeb: "The HMRC ruling only applies to the Channel Islands and there are a number of alternatives as to where we might ship from, including Switzerland. We are still crunching the numbers on a number of alternatives and watching what everyone else is doing.

"It is relatively easy for HMRC to deal with Channel Islanders. But if Switzerland is a viable option – which I am not saying it is – I'm not sure the Treasury would be comfortable going to war with them."

Moxon said his decision would rest largely on what competitors such as Amazon do.

"We would absolutely prefer to go back to the UK. We are based in Somerset, which gives us some price advantage. But if you are not the least expensive supplier on eBay or Amazon, you will not sell anything.

"If someone finds a less-expensive route to market, we will have to follow them."

HMRC estimates that 75 per cent of all international parcel post to the UK from outside the EU originates in the Channel Islands. Last year it estimated the cost of LVCR had risen to £130m annually.