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Top ten tax shirkers

HMV

HMV

To be honest we could have named Amazon, Tesco, WH Smith, Sainsbury, Asda and a number of others here as well because all are engaged in VAT avoidance through the Channel Islands.

The current Low Value Consignment Relief (LVCR) for goods imported from the Channel Islands lets retailers import goods worth up to £18 into the UK VAT-free. As a result every major music retailer now sells CDs and DVDs online using offshore centres, the goods having been shipped there first to be returned to the UK tax free.

Industry pressure and the rise in taxpayer protests have flagged up the perfectly legal avoidance technique as ripe for repeal and prompted the Treasury to tell The Guardian it was "actively reviewing" LVCR as part of the wider simplification of the UK tax system.

Offshore retailers gained an even bigger advantage over the high street on 4 January when VAT went up to 20%.

The amount lost to HM Treasury as a result of this arrangement is now thought to exceed £150 million a year – enough to pay for school sport.

Sources:
AccountingWeb, 13 December 2010
Tax Research UK, 22 November 2010

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