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Online CD sellers may lose offshore haven

VAT dodge may be ending

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The States of Jersey has given CD sellers who have set up on the island in order to avoid VAT a year to close up and leave.

Several firms including Amazon, HMV and Tesco have moved CD fulfilment for online orders to the island so they can sell CDs to British punters without charging them VAT. This means they can sell CDs for less than a tenner. Arsenal bore and record shop obsessive Nick Hornby recently backed a campaign to close the loophole because it is damaging business for independent record shops.

But a change in policy from the Jersey government might put an end to this.

The statement explains that the status quo is "attracting some negative publicity which is in danger of undermining the Island's good international reputation and integrity."

Jersey divides fulfilment companies into two types. Firstly Whole Chain Companies - WCCs - which buy in and own stock which they then sell. Secondly Third Party Service Providers - 3PS - companies which essentially provide a service for another company and do not benefit from the revenue raised by selling the CDs. Jersey believes the first type of firm is more beneficial to the island's economy than the second.

The new policy states that "existing WCC should be supported, particularly those that are or have been majority beneficially owned by Jersey principals."

But 3PS firms working on behalf of UK companies will get a time limited license "to allow them gradually to reduce and eventually to discontinue their activities."

But not everyone is convinced Jersey will actually act. It made similar noises back in July without taking action.

You can get the whole statement from the States of Jersey website here.

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