Call for VAT loophole to be closed

The Forum of Private Business (FPB) has called for MPs to support an Early Day Motion (EDM) seeking to close a VAT loophole affecting many small retailers.

The Forum of Private Business (FPB) has called for MPs to support an Early Day Motion (EDM) seeking to close a VAT loophole affecting many small retailers.

The EDM has been introduced by Andrew Love MP, Chairman of the All-Party Parliamentary Small Business Group (APPSBG).

The loophole, which has been exploited by retail giants such as Amazon, Tesco and HMV, allows individual goods with a value of less than £18 to be imported to the UK from the Channel Islands without the imposition of VAT.

The FPB's Campaigns Manager, Victoria Carson, said: "Firms that sell goods such as DVDs and CDs from UK high streets are being driven out of business simply because they cannot compete with their rivals' artificially low prices." Although Chancellor Gordon Brown promised to look into the issue in his March 2006 Budget speech, any evidence of action has yet to be seen.

As a result, the FPB is urging MPs to sign up to Mr Love's EDM and increase pressure on the Government to restore a fair trading climate for affected retailers.

Mr Love, the Labour MP for Edmonton, said the current state of play is unacceptable: "This EDM is about the creation of a level playing field for independent retailers.

At present there is a small number of larger companies abusing the system and as a result, threatening the jobs and livelihoods of many employees up and down the country; this must not be allowed to continue." This VAT loophole already costs the British Government £80m in lost revenue - a figure that is predicted to rise to £200m over the next few years.

Richard Allen is the Managing Director of Delerium Mail Order Limited, and has felt the impact of this problem on his own business.

He said: "There is something shady, nasty and not right about this abuse of the tax system.

I cannot sell certain CDs that are being sold from Jersey because I cannot compete on price.

The Government needs to realise it is allowing the music industry to be destroyed in this country.

All we want is fair competition." Miss Carson is adamant that no more time can be wasted in closing this loophole, as Mr Brown's delay in taking action is only serving to condemn yet more businesses to an early grave.

"We are calling upon our members to get in touch with their MPs and insist they sign up to this motion.

"We already have independent retailers representing over 100 outlets behind us and we expect to be joined by more.

This demonstrates the strength of feeling there is about the exploitation of this loophole.".

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