MPA welcomes VAT loophole closure

The MPA welcomes today's announcement that the system allowing Channel Island companies to sell goods to the UK without VAT will be closed from 1 April.

Low value consignment relief (LVCR) has allowed goods under £15 to be sold to UK customers VAT-free. A number of online retailers set up operations on the Channel Islands to benefit from the loophole, in particular for the sale of CDs and DVDs.

The MPA has previously made representations to Government on this issue, urging them to put an end to LVCR and to remove the disadvantage at which it placed independent music retailers.

Stephen Navin, MPA chief executive said, "The LVCR tax avoidance scheme was prejudicial to UK based music retailers – if there has to be VAT on cultural goods at all then let the playing field be even at least".

Announcing the change, Treasury Minister David Gauke said, "These reforms will ensure that UK companies, especially small and medium sized enterprises, can compete on a level playing field with those larger companies with the resources to set up operations in the Channel Islands".