Fulfilment faces VAT wipeout ‘in less than year’
Friday 25th March 2011, 2:30PM GMT.
CHANNEL ISLAND companies exporting CDs and DVDs to the UK free of VAT could see their advantage wiped out in less than a year.
If the European Commission agrees, HM Treasury could follow a precedent set by Denmark, which applied in 2004 to remove magazines from the tax exemption relief.
The Danish authorities discovered that some publishing companies were rerouting their distribution to subscribers in Denmark via territories not covered by the EU directive on harmonising turnover taxes.
Within 10 months of asking, a derogating measure was agreed and VAT was reinstated on the products. A similar request that could specifically target the Channel Islands is an option that could be considered by the UK.
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Why not make an exemption for flowers? They are usually local businesses.
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Mr G – as the article says, the most likely action is that the LVCR will stay in place but that it will not apply to CDs, DVDs or books.
Flowers are actually not that relevant as most orders would be over £15 (or even the previous £18 level)
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Mr G
The flower businesses might be local – shame that the flowers themselves are from Kenya!
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Terry – there is no VAT on books in the UK.
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Mr G,
This would be unfair to UK flower sellers, only because local businesses are too stubborn to pay VAT like the rest of the UK doesn’t mean they can start saying it’s unfair.
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Mr G…the most misinformed contributor to these forum
Chin chin old boy….must do better.
That is all.
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Adam – Guernsey is not part of the rest of the UK and it’s consumers who pay VAT not businesses.
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To have a business which depends on another juristdiction not changing its laws is to have business built on sand. For laws get changed all the time.
The UK is changing its laws as is it’s right and the basis on which these business’s have been built has gone.
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I can buy DVD’s here in Tesco on my English high street for £4, £6, £8. And thats inclusive ov VAT. I could then go on the internet and buy at the same price. It is NOT the internet killing of the high street it is the evolving world of commerce, meaning the major retailers will always be able to undercut the smaller shops, and downloads will just keep on growing, meaning less people want to buy CD’s. Downloads one day will eat up the high street. The fulfillment industry closing will make no difference to shops closing, you mark my words.
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Mark – Most of the UK businesses complaining about LVCR were UK internet businesses. I know. I was one of them. I’m delighted now I don’t have to lay off my local staff and buy my way offshore to run my business and that I can operate from a far more efficient and cheaper location on the UK mainland where all my customers are. Sanity at last! I’m happy! By the way 99% of Channel Island Flowers are not even grown in the CI. That’s another ludicrous arrangement. If it wasn’t for the VAT issue you’d be running it from a UK warehouse in Cardiff.
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ts just a way for the uk to get us here on GUernsey to dig them out of a hole, we don’t use any services in England so why should we pay for them, I say we finally become a separate country why do we have to be part of England.
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dejaVu – this has been covered before on another article. Guernsey are not a part of England – if we were we’d all be paying VAT and this whole story wouldn’t exist. The issue is about UK consumers buying tax-free goods from the Channel Islands. Also, don’t think getting rid of LVCR will dig the UK out of a hole. It’s worth about £100m apparently which is nothing compared to the UK net debt (£2,252.1 billion at last count!) – in UK terms it will hardly register in the accounts.
cutthebs also has a point though. We need to be realistic and accept that the ONLY reason these centres operate from the CI is LVCR. Take that away and they’ll be gone quicker than the latest recruits to P B Falla’s famed exodus – and there’s really nothing we can do about it.
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PS if you’re interested in the UK debt situation check out
http://www.statistics.gov.uk/cci/nugget.asp?id=206
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Paul Le Page – given dejaVu’s name, I have a sneaking suspicion that his post was a repeat of the earlier post by “william”, in the full knowledge that it is just as wrong now as it was then, on every level.
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and is cutthebs also correct on his rather silly statement the 99% of CI flowers are not grown in the CI?
So in a nutshell – this character couldn’t compete and blames everyone else – how typical of the members of this pressure group.
For those locally who seem to support this campaign – can we expect them to chip in when potentially 1600 people lose their jobs over the two islands?
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dejaVu
| March 28, 2011 at 8:43 am
ts just a way for the uk to get us here on GUernsey to dig them out of a hole, we don’t use any services in England
Of course you don’t use Englands hospital at all.
And it would take more than Guernseys combined wealth to dig the UK out of its hole.
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Scoff all you want. I know that the overwhelming majority of the flowers from the Channel Islands are imported because I know someone in the postal industry. They come in refrigerated containers from Holland and are grown in Kenya and South America. They are marked up “Flowers From The Channel Islands” not “Flowers Grown In The Channel Islands” Truth hurts. There are two small growers left.
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Cutthebs
This is very similar to what I have heard as well. I have been raising this question on related threads for several weeks but nobody from the flower industry has seen fit to comment on it – I wonder why!
I heard it was flowers from Kenya and Turkey – I haven’t previously heard South America mentioned. I suspect that the figure isn’t “99%” although I suspect it is a figure well about 70%.
It sounds like a complete scam. Time for the flower industry here to come clean about it as it would certainly influence a lot of people’s opinions about whether the island should fight hard to get the local flower industry exempt, as Mark Fletcher has demanded. The island would have more than egg on its face if it was successful with such an exemption application and then the truth came out later.
We need to know. Come on Guernsey Press – please out your investigative journalists onto this. Its important.
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Cutthebs
I know a man in a pub but I don’t accept everything he says is gospel truth – I also know a lot of people in the postal industry – they’re called postmen!
Which two small growers are left – looks rather more than that to me driving around – and I live here which is more than you do I assume
Any merit in your arguments are lost when you go into imaginative mode – get your facts right!
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Hugo
Are the local growers actually growing here or are they merely repackaging the imported flowers? How would we know the difference?
I know from a very reliable source that the packing sheds are “disproportionately busy” compared to the amount of actual growing activity at the same sites.
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cutthebs
I wonder how many products are sold from the UK overseas that are not made in the UK but state they are from the UK. How many businesses source there products or get them made in third world countries and pay peanuts (maybe you`re one of them?) when they could be made locally which are putting people out of work?.
So some of the flowers are not grown locally, so what?. As long as the customers are happy it is nothing to do with you where they are from.
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Re the flowers. Check it out. You’ll find its completely true. Goods repackaged in the UK are sold in the UK and are within free circulation inside the EU. They are not claiming a tax relief pretending to be an import (having already been exported in order to do that). Stop calling chalk cheese. It makes no sense to repackage them in Guernsey for sale in the UK does it ? ! You seem to have an ability to blindly defend the illogical. If there was no VAT at all and you were born in Guernsey and your customers were in the UK would you run a warehouse in Guernsey ? Duh…no. You’d be pretty stupid if you did.
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Have a look at them. Flowers FROM the Channel Islands. Not Flowers GROWN IN the channel Islands.The label speaks for itself.
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cutthebs – what’s your point? why should a person born in Guernsey not run a warehouse in Guernsey? It seems perfectly sensible to me to run a business in the place where you live! And if there is a market for flowers that you do not grow yourself, why should you not be able to import stock to satisfy demand? As you say yourself, they are labelled truthfully.
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People in Guernsey can buy goods VAT free from the UK no problem. Despite that under UK consumer law they are considered to have been bought within the UK so are covered under those laws, which are lot better than Guernsey’s. Talk about having your cake and eating it.
Perhaps thats the Guernsey problem always thinking the world must do things for Guernsey. These VAT changes were made because according to certain UK business’s they were disavantaging them. The British Government looked at what they said and have agreed with them, so changed the VAT rules.
If that saved jobs in the UK then the British Government is doing what is elected to do, look after its constituents. If it dosen’t save jobs it’s also done what is suppose to do is listen to it’s constituents.
And when people talk about an independent Guernsey with no ties to the UK. Well you may be having a foretaste of what that could mean.
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Did you know, cutthebs, that a Guernsey company is the world’s biggest grower/producer of clematis plants?
Check it out for yourself.
http://www.guernsey-clematis.co.uk/template.asp?pageDef=GCN
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Re cutthebs posts
Sounds like one for Saint Barry Brehaut to investigate
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Terry Langlois “cutthebs – what’s your point? why should a person born in Guernsey not run a warehouse in Guernsey?”
Can’t believe I have to explain this one. If there was no VAT advantage you’d be wasting money shipping it to Guernsey if most of your customers are in the UK. Labour costs more , postage is more and its very inconvenient due to weather, extra transport etc. That’s why. You could still run the company from Guernsey but the packing and fulfilment would be done on the UK mainland. Guernsey has no advantage whatsoever as a fulfilment hub, other than the VAT advantage If they are grown locally that’s another matter. Glad to see some flowers are! Listen, if people just admitted the fact that you have businesses built on tax avoidance I think I’d have more respect but this constant stream of paper thin excuses doesn’t do you any favours. Really.
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cutthebs said
“Listen, if people just admitted the fact that you have businesses built on tax avoidance I think I’d have more respect but this constant stream of paper thin excuses doesn’t do you any favours.”
I wouldn’t bother if I were you. I’ve been saying that for years about Guernsey’s reliance on tax dodging industries and the same people keep saying the same old nonsense even whilst most of the world has understood and are indignant. Pretending it’s valid through its legality is just no excuse.
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cutthebs – you’re missing the point. The growing industries were here before the UK joined the EU. They were not set up to avoid VAT, they were set up because it made sense to set them up in Guernsey and because the growers were Guernsey people. Their businesses then developed by selling non-Guernsey flowers because it made commercial sense to do so. If VAT changes in the UK mean that it is no longer commercially sensible then so be it, but there is no scandal there.
The fulfilment businesses which ship from the UK and back to the UK are a different matter.
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Arnald – “Pretending it’s valid through its legality is just no excuse.”
It’s taken me over 20 minutes to regain some semblence of composure.
That really is very very funny.
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Arnald
The fulfilemnt industry is not built on tax evoidance! The UK government deemed the £18 soon to become £15 limit!
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cutthebs
So all these people that are buying from Guernsey are doing so for what reason? oh yes to avoid the VAT in the UK? so no morals there then eh in trying to support your country from the very people who live there?. It`s your laws not ours.
I would have more respect if you just admitted you are more interested in your own business and your income than the many thousands (maybe) who save a few quid by not buying from you and others, but hey times are hard and you have to look after number one,just like your doing.
Pete
What rubbish, we dont think the world must do things for us and we really wouldn`t want to much advice from the UK or the rest of Europe for that matter, unless we want to get in the mess you seem to have gotten into:)
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“The fulfilment businesses which ship from the UK and back to the UK are a different matter”
Close…
“The businesses which ship from the EU and back”
Is more accurate…. none of this ‘third party’ and ‘genuine local business’ nonsense to confuse the issue.
I’d be amazed if EU knew circular shipping of Flowers was going on. Didn’t even have computers when this industry was first acknowledged by EU.
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bcb – Most UK consumers are not even aware these sites are shipping from CI. Many of them don’t even tell you! (in breach of the law I might add) Do you seriously think Joe public understands or even is aware of LVCR ? Play.com adverts all over the London Underground and al over TV hardly suggests goods coming from the Channel Islands does it! Yet another bizarre justification “It’s the consumers fault….the dirty little tax avoiding scum bag!”
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Anyhow I’m off…..I think this line of argument has hit the buffers.
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Gilthead
So, say, apartheid was valid because it was legal?
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mike
Yes it is. As are Guernsey’s myriad vehicles for moving capital away from where it is derived to avoid taxation.
Really, what would those UK companies be doing setting up mail order functions from an island with the abnormally high shipping, employment and land costs?
Make sense, man.
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Tax avoidance is a scourge on society, especially on those that have little resource to implement tax collection strategies. The fulfillment industry may not be a major cause of reduced national revenues – yet – but as sure as eggs is eggs, pretty much most of what the UK’s offshore jurisdictions do, is.
Get some education. Stop pretending everything is ok and that what we do makes anyone’s lives, other than a tiny fraction of a percent, better.
Guernsey is well able to perform financial transactions that do not rely on de facto fraud. Stop supporting the weasel words.
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I’m sorry Arnald, tax avoidance is not a scourge on society as its perfectly legal.
If you don’t like it get it changed.
Whether you like it or not we live in a capitalist world and if there are opportunities they will be taken – its the way it works.
And as people in the UK become poorer through inflation, spending cuts, higher taxes etc they’ll take every opportunity to save a few bob by avoiding tax.
Fact of life in high tax jurisdictions.
Oh the paradox…
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cutthebs – but the imported flowers come from outside the EU, so where’s the issue?
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cutthebs
But they are getting a better deal and thats what they care about. Do you think they would care if they knew they were from the C.I.?.
As has been pointed out they are imported from outside of the EU.
If your so worried about tax avoidence why dont you take a closer look at your city of London and all the cheap imports you take in, resulting in putting people out of work just so your profit take is higher, so much for the moral issue eh.
Arnald i do agree with a lot of what you say but not on this one regarding the flowers at least. Its just some people that can`t compete and they want to fix it by making their customers pay the price.
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Arnald
Haven’t you got a march to go to? Comparing tax avoidance with apartheid is like comparing an apple with a roller skate. Totally irrelevant. Apartheid was illegal everywhere except South Africa. Tax avoidance is legal everywhere. Move on.
Gilthead
You are quite right, but the issue is the plea from Mark Fletcher to exempt local growers from tightening of LVCR in order to protect local exports, when such exports don’t actually appear to be local at all. By all means try to protect genuine Guernsey produce, but I think Mark Fletcher was rather misrepresenting the local flower industry.
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GM
You miss the point. The defence is that if something is legal then it is right. The use of an extreme example (if it wasn’t for a concerted campaign from those without of South Africa then it wouldn’t have desisted – don’t you think?) is to highlight the paucity of that defence.
The evidence that tax avoidance, mainly by the multinats, that use jurisdictions such as ours (but mainly by others), causes degradation of development and economic security is now becoming well documented. This is as a result of campaigning worldwide by a whole host of organisations.
As Guernsey embarks on winning ‘business’ from countries like India and China, countries it is recorded that have massive illicit capital outflow, then it is absolutely necessary for the public to know what the real impact of that business really has.
By trusting the words of the industry involved we allow ourselves to be sucked in to the religion that the facilitation of the ‘sophisticated services’ we provide are globally beneficial.
There is no opposing viewpoint. We trust the politicians implicitly in this regard, whereas when those politicians rule against a shed, or building an incinerator, suddenly that trust disappears.
All I’m asking for is an open acknowledgement from decision makers that they actually know what they are talking about, rather than repeating the marketing material from companies that have captured the regulatory function of Guernsey, the island.
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Tax avoidance may be legal but it is morally wrong. It is evasion by another name.
Businessman are using what is, no matter what anyone says, a ‘tax loophole’ to make more profits at the expense of the rest of society. The ‘loophole’ part is borne out by people joining the bandwagon in their droves apparently to get around paying tax. The innocents are those poor Guernsey companies producing goods here that it was initially intended to assist and who will now lose out. Once again greed and a type of moral corruption have got in and poisoned a good thing. This should never have been allowed to happen by Commerce & Employment.
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Simply Read – no it isn’t.
I’ll give you a simple example – bloke drives a car in England. He drives 20 miles to get diesel at £1.35 per litre as opposed to his local garage who charges £1.60. He is therefore avoiding tax (VAT) by buying the cheaper fuel – and of course directly saving money.
However, if he taps up his farmer chum and fills up on his red diesel then that is clearly evasion and very very naughty.
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Gilthead
Pure facetious nonsense. Also incorrect. Unless that driver was crossing jurisdictions where one does not pay VAT on both the fuel and the duty, then that driver will be paying VAT. It is of no consequence that one trader can price lower than another.
Also, schemes endorsed by the state (such as tax relief on savings), is not tax avoidance in the same manner of using the legislative and regulatory rules of another jurisdiction to realise a difference in accounting for tax.
You really have no idea, do you?
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Simply Read – you have missed the point about VAT. UK businesses do not set up fulfillment centres here in order to avoid their own tax and increase profits, they set up here in order to not have to charge VAT to their UK comsumers. It is the UK consumer who saves the tax, not the business. The business just benefits by having a cost advantage over its competitors who don’t do the same thing.
And how could C&E stop it? We do not require all businesses to be regulated and so the government has no control over legal businesses. The only control that the States has is that it can refuse to grant housing licences to businesses that it does not like, which is a policy that has applied to the abusive end of the fulfillment business for a while. But if they employ locals, there is nothing C&E can do.
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Arnald – no you don’t get it and the statement is not incorrect.
Lets put in an Arnald way. Northern Ireland driver pops over the border to fill up in the Republic. Tax avoidance but not illegal. Simple enough?
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Gilthead.
Yeah yeah, why not bring in paying for the plumber in notes with no invoice. Duh.
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Tax Avoidance is not morally wrong.
Everybody has the right to limit their tax bill to what they are legally entitled to pay. It would be stupid to pay more!
The personal allowance you are issued with is a form of tax avoidance, what is morally wrong using it?
I think its strange that people whinge about it. On one hand they want to pay less tax and on the other they do not think there should be any allowances in any form that would reduce their bills or tax bills of others.
I think its due to a lack of public knowledge about taxation issues, sensationalist articles written by journalists who don’t understand what they are talking about and jealousy (ie when people with more money limit their tax bills, those with less money think they are pulling a fast one).
The result of it all could possibly be the average person shooting themselves in the foot.
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Arnald
You’re at it again, we are not a “UK offshore jurisdiction”, do you not get it?
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Whilst you are all having your say LOCAL jobs are again at risk of being lost…. is this not an upset in its self? I wonder how many honest people are declaring all their incomes to the tax man lets start a thread on that one shall we? people will always try to dodge the taxman FACT!
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Arnald – paying the plumber in cash with no invoice? that is tax evasion by the plumber – see even you (the self-appointed expert) cannot get it right.
So are all the French drivers driving over the border to Luxembourg the fill up their cars the “scourge” of French society? Or just sensible human beings? Are the many petrol stations just over the Luxembourg border immoral, or just making the most of the commercial realities of the laws laid down by democratic institutions?
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Arnald – tut tut. Are you suggesting that you or I evade tax by paying the plumber cash?
That’s illegal.
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Dani
More uninformed goldfish-bowl perception. If you remove the social value of tax and treat it as an expense, then you undermine the fundamentals of social democracy. Without taxation business would not thrive. By advancing an ideology that encourages non payment of tax, you ultimately eat your own tail.
It’s not about ‘allowances’. It’s about subverting the tax rules of the jurisdiction where the money is raised by using the rules of another jurisdiction through an expensive array of legal and accountancy privileges.
Doesn’t anyone keep up?
It’s common knowledge. the awareness of all these issues has mushroomed in the last five years I’ve been moaning about. No amount of hiding behind the marketing spin of our finance industry will disguise it. We may need it to survive, but let’s not pretend it is something that it plainly isn’t.
Phil
Do me a favour and butt out. When have you ever known anything? The City’s network of offshore jurisdictions is not open to argument.
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TL
There will always be a black market, was my point. That market is criminal. But making the much bigger market of corporate and wealth managementtax subterfuge legal through the leverage of the rich few, is neither profitable for society as a whole, nor sustainable.
If you hadn’t noticed, the same framework that makes Guernsey tick is the same one that facilitated the this depression. We may be sheltered from it here because those that have wealth are least affected, but view the rest of the world around you with a non biased analysis, and you can quite easily see the damage done.
This is not just a tax avoidance issue, it’s the entire way the banking and financial services institutions are set to operate.
Defending tax avoidance is the thin end of a wedge. The step to defending illicit capital flows and the defence of secret trading and trade imbalances are just below.
Even the Daily Mail is getting het up about it all. That’s going some distance away from the insults that have come my way in the past, hmm?
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Arnald – you are saying that driving across the border from France to Luxembourg to fill up your car is a criminal black market? what are you on about??
I am not defending the circular shipping conducted by some fulfillment companies (i.e those which are really UK businesses that we can do nothing about) because that is abuse of the LVCR and if the UK wants to stop it then that is their right (subject to EU permission).
I’m just pointing out that “Guernsey” is not to blame for the LVCR abuse, and that the mere existence of a flower warehouse here does not mean that the business is abusive.
This depression was not facilitated by tax competition. It was caused and magnified by highly risky financial products that were dreamt up, designed and put into effect in the US and UK (primarily). We simply do not have the expertise in that area.
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I think this arguement and pressure on “offshore” centres arose beacue “onshore” companies were discovering that their sales were dipping. Did they then translate that into an effective tax “loss” to HMRC? Surely their loss in sales is significantly due to iTunes becoming more popular… I buy almost all of my music now via iTuines and where do they pax tax….!! USA ?? I might be wrong so please forgive me if I am!! There is clearly a lot of fulfillment done in the channel islands, but then charging Dog Tax was stopped in the UK as it cost too much to collect.. Simple economics…
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TL, you said
“Arnald – paying the plumber in cash with no invoice? that is tax evasion by the plumber – see even you (the self-appointed expert) cannot get it right.”
That’s a black market.
Surely you can see that I widened the argument from LVCR.
I didn’t say that the depression was caused by tax competition. I said that the depression was facilitated by the same legislative and regulatory opacities that enabled the bigger picture to be distorted and unreadable.
I’m not commenting on the single issue of LVCR abuse, I’m pointing out that the mentality that supports it as a legal method for a company to avoid a tax is the same thinking that allows more damaging and more immoral behaviour.
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Arnald – there was no argument for you to widen. you tried to make out that Gilthead’s example was equivalent to tax evasion. I pointed out that your example was illegal and so totally different from what Gilthead was saying. No-one is saying that tax evasion is right.
re you last paragraph, that’s why it is impossible to discuss anything with you. you cannot discuss specifics and everything ends up with grandiose statements that refer to nothing in particular.
sorry Arnald, but we are discussing the LVCR here.
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bcb this thread is about the British Govenment changing it’s internal tax rules, nothing to do with Guernsey as it’s not part of the UK, yet read all the Guernsey posts whinging about it.
If the boot was on the other foot and it was a change in Guernsey internal tax rules that people in the UK were whinging about then all the posts in this thread would be about telling the UK to mind it’s own business. Well why aren’t you all minding yours.
The mess the UK and the rest of Europe is in bcb if you knew what you were talking about, you would know that the current economic mess is the creation of the good old US of A. Years of grossly fraudlent finacial practices and greed caused the present mess.
Oh, have you got an account at a high street bank.
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Arnald
Paying a plumber in cash is indeed a black market but if the plumber fails to declare the income thewn he commits tax evasion – that’s black and white. Nothing to debate.
LVCR is not tax avoidance or tax evasion. The sales are exempt from VAT. The EU and UK created the exemption – not the major retailers using it and not their customers. The retailer is NOT avoiding tax. VAT is not paid by the retailer – its is paid by the customer and merely handed over to HMRC by the retailer. The customer isn’t avoiding tax either. He is simply buying from a website from which sales are exempt from VAT. He is benefiting of course, but from lower prices, nbot from avoiding tax.
I don’t like the “roundtripping” of UK goods via here. Of course its a “sham”. But its a “sham” which has been condoned by the UK and EU for years. They’ve known all about it and have done nothing about it so let’s be careful when apportioning blame. Its not Guernsey’s fault.
Just as per the decision to create the exemption, the EU and UK is equally free to close it and Guernsey just needs to deal with that as and when the time comes. But where’s the desire to close it? All that’s happened is that the limit has been reduced by £18 to £15. What does that message say?
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TL
What’s there to discuss about LVCR? It’s an open and shut case.
That’s why it’s impossible to have form of dicussion with the likes of you. No vision. No notion of interconnectedness.
I hope Guernsey schools produce a more philosophical breed soon.
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Pete – I don’t see many posts whinging about the changes or saying that the UK is not well within its rights to change its own rules.
This issue is more the fact that people from the UK have come on here accusing Guernsey people of stealing their tax or their business. It’s a bit more complicated than that – mainly because the people saving the tax are in the UK and because the businesses that are abusing the scheme are, by definition, UK businesses that should really be selling their stock from their UK warehouses.
The other point is that the changes that may be made will have a detrimental effect on legitimate businesses who were the originally intended to be covered by the LVCR. It would be a shame if their businesses also suffer due to the abuse by the new arrivals.
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Arnald – as is clear from my post of 9.22, and GM’s post of 8.50, the situation with the LVCR is absolutely not an open and shut case.
you’ve not actually said what is wrong with local growers using the LVCR.
you consistently fail to make the necessary distinctions in order to view things as they are. you consistently lump everything together in the “bad” category and then fail to actually assess whether your preconception stacks up to analysis. in many ways, you’re like a typical Daily Mail reader ;-)
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It still bothers me that something that every one seems to forget is that times are changing. Lets just forget the flower market for a second and the fulfilment industry for a bit and look at things in general.
No one wants to have a shelf full of CD’s or DVD’s these days. Your phone is your mp3 player as most are these days. Who out there wants to have a computer that is full with music that you have had to buy from a shop, go home and then copy the music to your drive just in order to get it on your mp3 player? I don’t any more.
It’s easier AND cheaper to go Amazon or itunes and buy a single song that you want and not the whole album! Sales of CD’s and DVD’s have fallen drastically over the past few years and, some companies have even stopped producing vinyl! An extract from the Guardian on 5th Jan “Combined digital and physical sales, chiefly CDs, dropped by 7% overall to 119.9m units. Digital album sales were up by 30.6% on last year – from a little over 16m to 21m – but the CD market continued to slump, falling 12.4% to 98.5m.”
Yes fulfilment may have done some damage a few years ago but people need to blame some one and they are picking on us. If there was any one to blame at this present point time, then blame time and evolution for the slump in sales.
As an upcoming DJ, i would prefer to carry around my laptop with ALL of my music on than few select vinyl and leave the rest at home thinking how i wish i had bought that record with me now.
I hate this subject with a passion, its all people that are too blinkered to look at whats happening now and in the future and would rather blame every thing on some one even though they are not 100% at fault! Fulfilment may have caused damage in the past but that stopped a long time ago.
Sorry Rant over and I’ll go sit in the corner again :)
http://www.guardian.co.uk/business/2011/jan/05/album-sales-plummet-sixth-year-running
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TL
Er…this thread was specifically about the loophole used by UK retailers. Someone else brought in the flower thing.
When talking about LVCR the subject is the circular shipping. Yeah of course, if you want to be a pedant all your life, you can lump in the legit business to make it look like it’s a grey area, but when it comes to tax abuse, the loophole is clear.
Surely flowers cost more than 18 quid anyway?
No, you are a typical Guern who can only see a Guern’s way. If some subjects are not made black and white then no change will ever occur. The focus has to be on the bad parts otherwise nambies will always go “oh it’s more general than that, leave off”.
Society didn’t get where it is today by shirking responsibility.
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i have read all the threads and thought my story might be appropriate to shed some light on the argument. I am an internet retailer of flowers. We buy extensively local flowers when available but we also import from Holland certain flowers and certain times of year when we cannot get them. But still a good % come from here. The reduction in LVCR will hit us hard and we are now seriously looking at moving some or all of our business to UK or Holland. we are a local company who employs 30+ people directly never mind the growers and postmen. I do not want to move my business but we cannot afford to drop our prices so much as we have been hit by large postal price increases, minimum wage and now this. if we move then there is little chance we will be buying our flowers from here. It is extremely disappointing that our States weren’t able to stop/legislate against the uk high street CD companies coming here and causing the uk government to act. The irony is that the action of dropping the LVCR doesn’t affect the CD companies, volumes are dropping significantly due to downloads, rental sites like spotify etc.. UK govt was put under too much pressure not to act on what had become a large tax take they were missing out on. just a shame their actions has hit genuine local companies rather than the real targets.
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Arnald – read my posts. Have I defended the circular shipping? No. In fact I have condemned it.
My posts have all been challenging attempts by posters to make the issue wider than it really is. (eg pointing fingers at the growers, saying that C&E should have stopped the industry, etc.)
Stick to your black and white world if it helps you, but you’ll never fully understand anything.
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I wonder if traitor Ted Heath is spinning in his grave if he can see what a mess his 1971 dream of joining the European Economic Community has now turned into
It all started off so well as a large back scratching trading body (to the great detriment of the New Zealand lamb farmers)but has been hijacked by those bent on a United States of Europe
Over to you Dave Jones !
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Why charge us VAT just because we have more sunshine hours and therefore better growing conditions?
I know for a fact that many many millions of items are grown here and in Jersey…
Get your facts straight before you decimate an age old local industry that employs 100′s of people. If we loose fulfilment then the Channel islands might as well join Hampshire because we wont be able to deal with the unemployment and drop in tax receipts….
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Pete
Try calming down and read the posts again, i have nothing against the UK changing there tax laws. But trying to blame the CI is not the way to deal with it. We were minding our own business till the finger was pointing here.
If you think the US are the only ones to blame for this mess than i dont think you are seeing the bigger picture, try looking at your last government for a start and there spending culture.
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Wow! Everyone’s been busy. Flowers. Look its very simple. Flowers are vattable in the UK. Why should anyone be able to see flowers in the UK VAT free no matter where they come from ? Bug off!
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Fulfilment without LVCR in The Channel Islands is a Chocolate Teapot. Face it.
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All this stuff about music sales are collapsing is scaremongering. Yes from the huge levels they were at but its far, far from dead. I know someone who just sold 10,000 vinyl of a new heavy metal act. Armchair experts the lot of you.
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Graham – “UK govt was put under too much pressure not to act on what had become a large tax take they were missing out on ” No …UK Govt. started getting complaints from virtually ever sector imaginable as pure greed took over offshore. For example there are at least 15 perfume retailers in Channel Islands although the way Under Article 23 of LVCR Directive perfume is excluded from LVCR so don’t know what’s going on there. Another screw up by HMRC no doubt.
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Cutthebs
Why should anyone be able to buy flowers in the UK VAT free?
Because the UK decided they should, so long as they cost less than £18.
But you seem a bit confused. You say that fulfilment in the CI is useless without the LVCR, but then you say that there are 15 firms selling perfume despite the fact that they do not qualify for LVCR. You need to get your arguments straight
Ultimately, if the UK introduces an exemption it cannot criticise people who take advantage of that exemption. If it has unintended consequences or is used more than expected, then re-think your policy and rules. But don’t make out that people who used the exemption are stealing you babies
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” Why should anyone be able to buy flowers in the UK VAT free? Because the UK decided they should, so long as they cost less than £18 ” Glad you agree. Stupid policy…. privilege withdrawn. One thing I’d agree with you is UK Govt. very, very stupid. No dispute there. This whole episode makes no sense at all. What’s next. Orkney major fulfilment hub.
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“But don’t make out that people who used the exemption are stealing your babies” Come on…how many times have we heard “Its not damaging UK business” and versions thereof from CI and on this forum ? No… of course not! I’d agree with you that anyone who gets this advantage would of course fight to keep it (I would) but if anyone claims that they had no idea what any consequences would be top UK retail then they are either very stupid, deluded or liars. How could a 20% advantage possibly cause a problem! Emperor – No Clothes = No Clothes + Emperor
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cutthebs – orkney fulfilment? No, because that is part of the UK and the EU.
I do agree that the situation is entirely of the UK’s own making, but I don’t think it is a stupid policy. It was brought in for good reasons across the EU and this was not purely in order to give a favour to the Channel Islands. Since when has the UK or the EU ever done that? No, it was brought in for reasons of self interest – it being too expensive to worry about chasing overseas businesses for small amounts of VAT.
I am not defending the abusive end of the fulfilment business, but I do think that you are wrong to be criticising us for that, because it is not our our making. It is UK businesses which have created that. There is also a danger that a knee-jerk reaction by the UK government would not make sense for anyone, in that it would ignore the good economic reasons for the original policy while also damaging CI businesses which are not guilty of abusing the LVCR, only of making use of it as originally intended.
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Terry Langlois – One big problem with your theory. The VAT prepaid scheme which started in 1972 meant that ALL VAT was collected on goods sent to UK up until 1983. The introduction of LVCR in 1983 in the case of CI lost the UK VAT and always has done because VAT could easily be collected anyhow. There is no cost advantage at all to the UK. The only reason they left LVCR in place for CI (and it can be excluded under EU directives on a territorial basis) is because they stupidly thought nobody would abuse it as per the 1997 VAT Assurance Review (which details this assumption). Oh and by the way, I understand seedlings are circular shipped from UK in vast quantities grown and then sent back mail order to UK. So yes you are right a large number of flowers are grown in CI, but not quite as you suggested…. This whole ludicrous arrangement ha only survived because EU didn’t notice it. Now they have they can see it’s a clear breach of the Directives as it is being abused. The CD and DVD industry exposed the whole rotten scheme to the world.
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“CI businesses which are not guilty of abusing the LVCR, only of making use of it as originally intended” WRONG! WRONG! WRONG! There is nothing in the Directives covering LVCR that grants any right to any “business” to “USE” LVCR as you suggest. Its an import relief. Its not a method of gaining a tax advantage within the EU. It has no “USE” for a business. Read the legislation if you don’t believe me.
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