Fulfilment firms eye Swiss move
Saturday 12th November 2011, 2:29PM GMT.
Swiss Post is encouraging fulfilment customers to shift operations to Switzerland. 1197491
A DOZEN Channel Island businesses have already enquired about moving to Switzerland following the scrapping of an agreement that allowed goods under £15 to be shipped to the UK VAT free, the country’s postal service’s fulfilment expert has said.
The claim came from Swiss Post head of industrial distant selling Chris Stevens, who oversees the company’s global e-commerce operations and coordinates with sales teams across the UK, US and Asia.
He said that following HM Treasury’s announcement that it would scrap low value consignment relief for the Channel Islands, companies were now looking to move in order to survive.
‘We’ve been talking to businesses for a long time to get them to consider Switzerland as a base,’ he said.
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I would have thought it’s blatantly obvious that if enough of them move to another country to exploit the loophole the UK government will simply close it like they’re about to do here.
Unless a court somewhere declares the targeting of individual jurisdictions is illegal of course.
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Does that mean a whole load more Guerns are coming to join me in east Swissyland? :D
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Good. Once they move then Switzerland LVCR will be closed down as well hopefully costing these companies a fortune in wasted relocation costs. Also Anti-Avoidance measures from HMRC might finally prosecute some of the UK companies involved in this dodge, for cheating the tax system.
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Well that won’t work – extract from HMRC notice re removal of LVCR from Channel Islands:
Q. Will companies just move their operations to another non-EU country?
A. Probably not. Most companies based in the Channel Islands benefit from an HMRC trade facilitation measure, the ‘Import VAT Accounting Scheme’ which allows automatic collection of UK import VAT at source. Packages are not delayed at international postal sorting offices as an assessment is made of the VAT due and the end consumer avoids an £8 surcharge to cover Royal Mail’s administrative costs. The ease of access of companies based in the Channel Islands to the UK consumer market via the postal system is therefore similar to that of domestic UK-based companies rather than to their non-EU counterparts.
Q. Would you remove the exemption from other non-EU countries?
A. The impact of these changes is being closely monitored. If there is evidence that there is diversion to other non-EU countries to exploit LVCR the Government would consider the case for additional action.
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Geoff T,
Well it may work if Switzerland also has a similar trade facility in place with the UK, I don’t know.
Yes thay may consider further action if Switzerland or another jurisdiction was used but it would take some time to assess that and another period of time to take action, possibly years. After all this move by HMRC has been on the cards for a number of years.
I think our best bet is a mixture of Guernsey Government lobbying and legal action by those companies involved. Fair and equal treatment has not being followed by the UK in this case.
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Truth
They are not cheating the tax system, its a perfectly legal loophope.
Having said that the UK are quite entitled to close that loophole, but in my opinion, instead of closing it for all, which would be fair, they are picking on one group and that i believe may be challengable.
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” they are picking on one group and that i believe may be challengable.” Well good luck with that one! You will be fighting UK and EU and I’m sure UK had belt and braces in place before they announced these measures. Nobody has read the LVCR Directive. If you had bothered you’d see it can’t be used for avoidance which is clearly the case here. To think you can take on the EU is a farce. 5 years at least and God knows how many hundreds of thousands and all the time no LVCR. And what will you tell the EU ? We are fighting to ensure that we can avoid VAT through your own directive ? Ho Ho. Good luck. Its over. Accept it. Find another fiddle.
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Truth – I agree with you that the UK companies engaged in circular shipping should be stopped (that is the tax avoidance that you mention) but what about the businesses started by Guernsey people who want to sell over the internet? They are not trading from Guernsey in order to avoid tax, this is their home.
By affecting those businesses as well, this measure does not just stop the abuse, if descriminates against all CI internet businesses.
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Terry it’s your home but it’s not your tax relief. If you have a business that can survive without a tax advantage great. Good luck. If not it’s a rubbish business. Try something else but please stop bleating on about unfairness. It just makes you look bad.
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No, it’s not our relief, it’s an EU relief. But for the flower sellers, they are now put at a disadvantage compared to other non-EU sellers. That is the issue. And they weren’t doing anything wrong in the first place.
When a business has been set up many years ago and relies on the proper use of a tax relief, for its original intention and purpose, but the relief is then withdrawn from them but not from other countries, you have got to expect that the business would be a bit miffed.
Your gloating just makes you look pathetic and shows how you tar all businesses with the same brush.
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“When a business has been set up many years ago and relies on the proper use of a tax relief, for its original intention and purpose,”
This is where it all goes wrong. It is not the original intention or purpose of LVCR to give CI business a 20% advantage. Read the EU Directives.
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I’d like to remind you of your gloating at complaints about LVCR on this website some time back. I know of one UK trader who called a CI retailer to find out about LVCR and he was told “We can do this legally and there’s nothing you can do about it” so I don’t accept there has been an attitude problem on both sides of the debate. However if you are going to ask how this abuse came about in 1983, how Labour in the UK and UK Customs ignored it for so long and who allowed this industry to develop on the back of what was always going to be a precarious loophole then I’m with you. People on both sides have suffered because of this. I don’t accept however that the business owners were unaware of the completely unfair advantage it gave to them. Employees may not have been so clear on it.
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