Tax Update - December 2011
Low Value Consignment Relief
On 6 December 2011, draft legislation was released by HM Treasury to remove Low Value Consignment Relief ("LVCR") from mail order goods imported from the Channel Islands to the UK. The measure has effect from 1 April 2012 and impacts the flow of goods from the Channel Islands to the UK only,
Following consulations between Ministers in Jersey and Guernsey, and careful consideration of legal advice, the States of Jersey and States of Guernsey have decided to commence legal proceedings through the English courts. In particular, they are taking initial steps in order to clarify EU Directive 2009/132/EC which relates to exemption from VAT on the importation of certain goods.
Given the importance of the fulfilment industry across the Channel Islands and the many jobs that could potentially be lost, there had been speculation that legal action was a possibility. We think this is a bold step and we will be extremely interested to see what the outcome will be.
Zero/Ten
Jersey's Zero/Ten regime finally received formal approval on 19 December 2011 from ECOFIN, the Economic and Financial Affairs Council of the EU. The official ratification follows approval by the Code of Conduct Group in September 2011 that Jersey's Zero/Ten regime, with the roll back of the shareholder provisions, will no longer have harmful effects.
Although the ratification was not a great surprise, it is welcome news nonetheless. Jersey has again been seen to be a compliant regime and we are hopeful that this news will bring much needed certainty to the wider business community.
The Code of Conduct Group announced in October 2011 that they are re-commencing their review of Guernsey's Zero/Ten regime. The review had been on hold since May 2010 after the States of Guernsey gave assurances that it would revise their strategy. We look forward to bringing further news as it develops.
