The FPB has warned the chancellor that he could face legal trouble if there is no action on a tax loophole affecting small independent retailers.
Currently, goods costing less than £18 imported from the Channel Isles are not subject to the 17.5% VAT that mainland businesses pay.
The loophole is currently being used to the advantage of online retailers of goods such as CDs and DVDs.
However, the Forum of Private Business (FPB) had warned that unless something was done to close the loophole by March 6, it would seek a judicial review.
According to the FPB, ‘the Treasury responded by asking for an extra month to consider the case being put forward’.
“We have seen no measures introduced by the chancellor to end this problem. Indeed, when you read the fine print of the Budget, Gordon Brown has suggested that he is happy with the progress being made by the Jersey and Guernsey governments,” said Victoria Carson, the FPB's campaigns manager.
“This is passing the buck; it is neither the responsibility, nor in the interests, of the Channel Islands authorities to resolve this issue. LVCR is killing off UK companies struggling to compete with artificially-low prices and the chancellor has a duty to act to protect them.”
The FPB has now granted the extension requested by the Treasury but said it would be furthering legal action at some point.
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