Sainsburys takes advantage of tax loophole
Supermarket giant Sainsbury’s is the latest retailer planning to take advantage of a unique VAT loophole.
Through the release of its CD and DVD website, which is located on the Channel Islands, it will join other retail forces, such as Tesco and Amazon, which are currently able to offer VAT-free items in the run up to Christmas.
Joined by Best Buy, the pair will be the latest blue-chip retailers that will set up complex shipping arrangements for goods on their websites that are priced less than £18. In dispatching orders from customers from the Channel Islands direct to their homes in the UK, these transactions will not attract VAT – an attraction for many.
As mentioned, other groups that already push online CD, DVD and games through the Channel Islands in order to avoid VAT include Amazon, HMV, supermarket rival Tesco and Play.com. As Sainsbury’s will be able to do, all are capable of offering demanded goods at tax-free prices that are noticeably cheaper than consumers would expect to find on the high street or in shopping malls.
While this is great news for those looking to save money on the items the whole of the year round, and not just Christmas, it is understood that the Treasury will not be too pleased that yet another big company will take advantage of this loophole as it is about to increase VAT from 17.5% to 20% in January.
Once the website is up and running, many insiders predict that video games will prove to be the most popular items.