Battle to save online industry
With hundreds of families facing an anxious Christmas over the end of a tax clause allowing Channel Islands firm to export some goods to the UK VAT-free, the governments of Jersey and Guernsey have taken a stand.
After Chief Minister Ian Gorst and Senator Sir Philip Bailhache, the Assistant Minister with responsibility for foreign affairs, flew to London for fruitless last-ditch talks last week, a legal challenge to the UK government’s move has been announced.
Economic Development Minister Alan Maclean said that twin legal challenges from Jersey and Guernsey would be made and that he has written to the UK Treasury to inform them of the move.
Guernsey firms using VAT relief welcome legal challenge
Guernsey and Jersey each announced legal challenges on Monday after the UK Treasury announced last month it would end the relief from 1 April 2012.
Healthspan owner Derek Coates, Chamber of Commerce President Julian Winser and flower exporter Mark Fletcher approved.
Mr Fletcher, who is also the chairman of the Postal Flower Association of Guernsey, said: "It's a very serious issue."
He said customers had already shown "resistance" to the payment of UK VAT, following the lowering in November of the LVCR rate from £18 to £15.
"They're opting for the lower price bouquets, so the revenue is going to be impacted," he said.
'Larger beast' Mr Winser said he was happy to see a legal challenge being made, despite the possibility of harming the islands' relationships with the UK.
"I think there's always a small risk if you antagonise what is essentially, in this case, a slightly larger beast than ourselves," he said.
"But on the other hand, if it is fair, what we're doing, then it is absolutely right to challenge it."
Derek Coates had already taken legal advice with a view to mounting a challenge on the grounds of discrimination.
The ending of the relief in April is to apply only to goods sent from the Channel Islands.
Mr Coates said he welcomed the move by each Bailiwick to oppose the decision.