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Thursday
Apr292010

Tesco Moves Back To Channel Islands To Avoid VAT Charges

I have watched this particular ongoing story with interest, since the eventual outcome could affect several businesses and also the UK government with regard to the issue of VAT.

You may remember that several years ago Tesco operated a business selling DVDs and CDs to customers online. If I had bought one of these discs it would have arrived in the post just like anything else.  But a closer look at the postage label would reveal it had come from Jersey.

Tesco deliberately avoided paying VAT by rerouting all of its orders through Jersey. Until that is they were blocked from continuing to do so by those in charge on the island.

Fast forward four years and I am now reading the same kinds of stories once again.  This time it would appear that Tesco has made its new home in Guernsey. But I have my doubts about how long it may remain there. The words ‘low key’ have been applied to Tesco’s new set up, but since it has hit all the main British newspapers and various other websites as well this will do no more than draw lots of attention to it.

£110 million was estimated to have escaped the clutches of the UK government during the year 2008, purely as a result of companies including Tesco operating via Jersey. But while Guernsey may have become the new Jersey with respect to this new VAT dodge, Guernsey has also expressed a strong dislike for the practice.

I shall be watching the news carefully to see where things progress from here. In the meantime if you require any information, advice or guidance regarding your business and your VAT questions, ask us here at St Matthew.

 

 



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