Every little helps, Tesco sets sail for Channel Islands tax dodge
There are plenty of companies sitting just outside the UK exploiting the tax benefits of trading from the likes of the Channel Islands; Play.com have built their reputation on it. Now the biggest retailer in the UK are muscling in on the game. Or rather, back into the game.
Tesco simply aren't making enough money by buying in masses of stock at bulk discount; according to the Guardian, they've quietly began fulfilling orders for their Tesco Entertainment website from Guernsey. Four years ago, Jersey kicked Tesco out for exploiting the European tax directive that waives VAT on some personal imports from outside the EU. A quick look at the website reveals Tesco Jersey has been resurrected, but instead fulfills orders from Guernsey:
The VAT relief applies to goods bought for £18 or less, and since 95 per cent of all DVD transactions fall under that threshold, fulfilling orders from the Channel Islands means a company can offer more competitive prices. And everyone's at it, with outsourcing deals aplenty - WH Smith, ASDA, Argos, HMV all have deals with distributors there. The reason Play.com is more famously flagged up as a Channel Island operator because it's the only retailer that's actually based there.
If everyone's doing it, what's the problem? The issue seems to be because it's Tesco, and the feeling that as the UK's biggest retailer they shouldn't be resorting to tax-dodging to make their money. Of course Tesco only want you to think of the children: "We have to remain very focused on price in this fiercely competitive market. The benefits from the VAT savings are passed straight to customers in the form of a lower price." Tesco want you to know they're doing it all for you, and Tesco doesn't benefit from the situation at all. Except of course, by selling more stock, generating more revenue and in turn more profit. Apart from that.