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Jersey and Guernsey work to recover from Channel Islands VAT ruling

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The Channel Islands of Jersey and Guernsey have said they will work to help their fulfillment industries develop new strategies for future development, following a High Court ruling on VAT that closes a loophole which had helped the online industry to flourish on the islands.

This week’s ruling means that from April 1 retailers based in Jersey and Guernsey must charge VAT on items they dispatch to the UK that are valued at £15 or less. Previously they did not have to, under the low value consignment relief scheme (LVCR). It is widely seen as having given an advantage to online-only traders delivering from the islands, and has been opposed by many UK-based retailers.

Jersey and Guernsey had challenged the scrapping of the LVCR scheme but yesterday the UK’s High Court ruled the proposed changes, which apply only to the Channel Islands, were consistent with EU VAT law.

Jersey’s economic development minister Senator Alan Maclean says he is “disappointed” with the outcome and that the island’s government, the States of Jersey, will now be considering whether to appeal.

“We know that some businesses will find it difficult to compete under these circumstances and as such, jobs are likely to be lost,” he said. “This will be a very difficult time for hundreds of Islanders who are involved in the fulfilment industry.” But, he said, the island would “continue our work to find other ways to support fulfilment businesses, in particular finalising plans to support the development of other markets.”

He was echoed by Guernsey’s deputy Carla McNulty Bauer, minister for commerce and employment, who said: “It could well have a major impact on jobs and the economy of the Channel Islands. Over the coming days we will be making contact with industry, following on from a series of meetings we’ve had with many of the main businesses, in order to ascertain what their plans are now that the decision has been reached. Of course Commerce and Employment will continue to do what it can to assist the industry and mitigate the effects of the HM Treasury decision.”

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