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Ruling on Low Value Consignment relief

15 March 2012

The Economic Development Minister, Senator Alan Maclean, has issued the following statement -

"The High Court has ruled that the UK’s proposed changes to Low Value Consignment relief (LVCR) are consistent with EU VAT law. Therefore, from 1 April it is anticipated that VAT will be applied to all commercial consignments from the Channel Islands, regardless of value.

"I am extremely disappointed at this outcome and we will now be considering whether to lodge an appeal. The changes, which are targeted against the Channel Islands alone, create an uneven playing field. We know that some businesses will find it difficult to compete under these circumstances and as such, jobs are likely to be lost.

"This will be a very difficult time for hundreds of Islanders who are involved in the fulfilment industry. However, since we became aware of the UK’s proposal, we have also been working on two additional strands of work which will now become our over-riding priorities.

"Firstly, we will continue our work to find other ways to support fulfilment businesses, in particular finalising plans to support the development of other markets.

"Secondly, we will deploy our Back to Work taskforce to support all those whose jobs may be at risk. The team has already contacted businesses to assess how best to support staff, and we will now put these plans into action and work with any businesses affected by today’s decision. 

"The decision to seek to clarify the legality of this proposal was the right one. On the basis of the strength of the legal advice received, we decided to take legal action through the English courts to clarify EU VAT Law in relation to the draft LVCR clauses, published as part of the draft UK Finance Bill 2012.  Similar advice was received independently from Industry; as well as our colleagues in Guernsey.

"However, no outcome can be certain in a court case, and having determined that these changes are consistent with EU VAT law, we must now support the industry to adapt, help affected individuals and focus our efforts on developing new opportunities in the weeks and months ahead."

Senator Alan Maclean

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