THE BUSINESS
VAT Loophole WILL Close
Channel Islands lose appeal against Government decision to end Low Value Consignment Relief from April 2012.
The Government’s decision to close the Channel Islands VAT loophole as of April 2012 has been upheld following a judicial review. The review was initiated by the Governments of Jersey and Guernsey, which claim that closing the Low Value Consignment Relief (LVCR) loophole on 1 April 2012 as proposed would be discriminatory and illegal. “This tax loophole, accessible only by large companies with the resources to move off-shore precisely with the purpose of avoiding VAT, is both anti-competitive and tax abuse - the Government has done the right thing in finally closing it,” said the Forum of Private Business’ Senior Policy Adviser Alex Jackman. “The abuse of Low Value Consignment Relief has been a major factor in the rapid decline in small high street shops. Closing the VAT loophole is essential to create a better tax system that is fair and proportional.” A spokesperson from the pressure group Retailers Against VAT Abuse Schemes (RAVAS), Richard Allen said: “The long-term abuse has destroyed many UK businesses which, other than for the lack of a 20% trading advantage, would have been viable operations giving people
jobs and generating tax revenue in the UK. “While we have sympathy for the effect on employment in the Channel Islands, it is for the people of the Islands to question their representatives as to how they could allow an industry that was based on the abuse of tax to become so important to their economy.” LVCR was created almost 30 years ago as an administrative relief for perishable goods sent by post. However, in the past decade many large companies have moved operations off-shore in order to exploit it, undercutting smaller retailers unable to compete on price Best known in relation to CDs and DVDs, a wide range of products purchased and imported from outside the EU for less than £15 qualify as VAT exempt under LVCR. Often, multiple goods orders are broken down to individual packages in order to exploit it. Abuse of the loophole involves a process known as ‘circular shipping’ exporting goods to the Channel Islands in order to re-import them to UK customers VAT-free. According to Treasury estimates the loophole costs £110m a year in lost tax – but industry insiders believe the real figure is much higher. www.hmrc.co.uk
Just the Tablet As the tablet market continues to perform well, with global consumer sales exceeding 60 million units last year, Futuresource Consulting explores the current landscape and the potential impact of tablets on the technology marketplace. Less than two years after the segment was established by the launch of the iPad, tablets are now clearly demonstrating an upsurge in consumer approval and uptake. As prices have started to drop to a level that makes them a discretionary purchase or premium gift, the market continues to open up. By 2016, global shipments will exceed 185 million and more than 30% of consumers across the USA and other advanced markets will own a tablet device. The USA continues to lead the way in tablet adoption, with an installed base of nearly 37 million devices at the end of 2011. Europe has seen a slower uptake, with an installed base of nearly 18 million at the end of 2011, though this still represents over 350% year-on-year growth. Although tablets have some additive effect on sales and are being purchased alongside conventional PCs and Macs (70% of iPad owners say they still have another primary computer), there has been cannibalisation of the netbook market, which will intensify as prices continue to fall. Longer term, the market will
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evolve to include Ultrabooks (small, lightweight, high power netbooks with extended battery life) and hybrid netbook devices featuring detachable or foldable touchscreens so they can be used as tablets. Futuresource carries out a regular programme of consumer research, Living with Digital, which shows that the devices have quickly taken on a mainstream role for applications like e-mail, web browsing, Facebook and Twitter. In particular, the 9-inch to 10-inch screen size is ideal for web browsing, video and photo viewing and news page presentation, with the multi-touch screen allowing users to scan, zoom, drill down, or roll video and audio clips. Responses from tablet owners and prospective buyers also showed a high degree of interest in music, video and gaming, as well as indicating that tablet owners use their devices for 2.5 hours a day, compared to just over one hour of internet usage among the general population. For more information, please call Jim Bottoms on 01582 500 100, jimbottoms@futuresource-hq.com www.futuresource-consulting.com
News Kodak Confirms Immediate Price Increases Kodak are making a number of changes to their range of analogue films during the company Discontinued Ektachrome E100G film restructure. Recently it was announced that Kodak would be discontinuing its range of colour reversal films, which affects the Kodak Professional Ektachrome E100G, Kodak Professional Ektachrome E100VS Film and Kodak Professional Elite Chrome Extra Color 100 films. Since this news, Kodak have revealed that they will be increasing prices acoss the remaining range of professional and consumer films to protect the business against rising manufacturing costs and lower sales volumes. The price rises, which a Kodak spokesperson has said will be around fifteen per cent, are being introduced with immediate effect for retailers although it may be several weeks before consumers begin to see the difference. www.kodak.com
Changes to Infocomm Audiovisual program InfoComm International is changing the name of its program designed to recognise companies that invest in certification and education for its employees. The Audiovisual Solutions Provider program has changed its name back to the Certified Audiovisual Solutions Provider program. “In addition to new logos, there will be a greater marketing investment and a new Performance Checklist that companies can elect to use,” says Duffy Wilbert, InfoComm International. The checklist is intended to provide a comprehensive test to determine if the audiovisual system achieves the client’s needs and that the system performs in accordance with the best practices of the industry. By providing this list to the audiovisual industry, InfoComm is establishing a set of guidelines to help industry professionals and their clients communicate effectively about their expectations for system performance. For more information visit infocomm. org/cavsp.