VAT ON CDS AND DVDS

That this House notes with concern the estimated £80 million or more of VAT lost to HM Treasury each year as a result of the use by major retailers in the UK, and elsewhere, of the Channel Islands as a location for selling CDs and DVDs ordered on the internet and previously imported into those locations from the UK for the specific purpose of returning them to customers in the UK without VAT being charged; believes that this practice undermines the credibility of the UK's VAT system, and the viability of the UK's independent music stores, all of whom are accountable for VAT on the sales that they make; threatens the livelihoods of the several thousand people who work in those stores and creates an environment in which compliance with the taxation laws of this country is seen as an optional exercise; and calls on HM Treasury to take the necessary steps to curtail this activity, including making application to the European Union to reduce the value of goods which may be imported without VAT being charged to £7 from the current limit of £18.