More retail news, and more than 100 companies affiliated to the Forum of Private Business, including indie record chains MusicZone and Fopp, have written to the Treasury to protest about that much previously reported loop hole that enables major retailers to avoid paying VAT on CDs and DVDs sold via their mail order outfits by basing those outfits on the Channel Island of Jersey (capitalising on a VAT loophole caused because Jersey is part of the British Isles, but isn't part of the UK or the EU).
Tesco, Asda and online retailers like Play.com are among the major players who benefit from basing mail order operations in Jersey - meaning they do not have to charge VAT on anything up to £18. Independent retailers claim that that gives the big players an unfair advantage - enabling them to undercut the smaller music and DVD sellers without effecting their profit margins - and are therefore calling on the government to change the rules so that only goods under £6.80 (10 euros) would be exempt from VAT - meaning most CDs and DVDs would no longer be exempt.
FPB boss Nick Goulding told reporters: "Firms who 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. In simple terms all retailers want, surely not unreasonably, is for the re-introduction of a level playing field. The situation is unsustainable and there are small retailers across the country who can't continue to be undermined in this way".
The government of Jersey (who licences UK companies who have bases there) have said they won't allow any new companies to base themselves on the island simply for the VAT loophole, and that as licences for those companies already there come up for renewal that they'll look to "gradually reduce and eventually discontinue" VAT avoiding operations. However, the FPB want more conclusive action sooner - and see the British government as being the people with the responsibility to act.