Treasury to close VAT loophole

HM Treasury announced yesterday that a loophole which allows retailers based in the Channel Islands to avoid paying VAT on good worth £15 or less. From 1 April next year, retailers sending goods from Guernsey and Jersey will no longer be exempted from the levy, after the government said the loophole was costing £140m a year. The change in the rules is likely to hit companies selling low cost goods such as CDs and DVDs, including Play.com and The Hut Group, which have benefitted from the low value consignment relief.