Tesco - cheap at any price
Tesco, the UK's largest supermarket chain, is sending CDs and DVDs on a round journey of almost 1,400 miles in order to exploit a tax loophole that allows customers to avoid paying VAT.
The disclosure is likely to spark allegations of hypocrisy - last year Tesco chief executive Sir Terry Leahy unveiled a "green plan" and pledged to reduce the retailer's carbon footprint. Tesco is due to launch its latest green initiative today, with the announcement that customers will be able to recycle paper-based food cartons in 100 stores. Tesco has also pledged to develop a carbon labelling scheme, which will show the carbon footprint of individual products. However, Tesco is shipping CDs and DVDs to Switzerland and back in order to save customers as little as £1.56 on a DVD, despite claiming in its corporate responsibility review that it was "taking practical steps to reduce ... energy use and greenhouse gas emissions". Tesco.com is one of a number of online retailers, including Asda and Amazon, that ships CDs and DVDs to customers from outside the EU in order to exploit a tax loophole. Because the products are worth less than £18 they qualify for "low value consignment relief" and do not attract the usual 17.5pc VAT. The loophole means that the retailer can undercut rivals and offer the latest DVDs for as little as £8.97. Earlier this year Tesco.com was forced to close its operation in Jersey after the Channel Island government refused to renew its licence following pressure from the UK authorities.
Although the retailer is now "posting" the DVDs and CDs from Zurich, it has no capability to process the orders in Switzerland. It is understood that the orders are being processed and the envelopes packed in west London by distribution firm EUK before being shipped to Zurich.
MP Jim Dowd, who is chairman of the All-Party parliamentary group for small shops, said: "Small retailers just don't have a chance. This is not in the public interest and it is not fair competition. If Tesco thought it was cheaper to ship CDs to Tanzania and back I'm pretty sure it would."
Tesco said: " Following changes in local legislation in Jersey and so that we can continue to offer these great prices to our customers, the fulfilment operation of this business is now based in Switzerland."
The disclosure is likely to spark allegations of hypocrisy - last year Tesco chief executive Sir Terry Leahy unveiled a "green plan" and pledged to reduce the retailer's carbon footprint. Tesco is due to launch its latest green initiative today, with the announcement that customers will be able to recycle paper-based food cartons in 100 stores. Tesco has also pledged to develop a carbon labelling scheme, which will show the carbon footprint of individual products. However, Tesco is shipping CDs and DVDs to Switzerland and back in order to save customers as little as £1.56 on a DVD, despite claiming in its corporate responsibility review that it was "taking practical steps to reduce ... energy use and greenhouse gas emissions". Tesco.com is one of a number of online retailers, including Asda and Amazon, that ships CDs and DVDs to customers from outside the EU in order to exploit a tax loophole. Because the products are worth less than £18 they qualify for "low value consignment relief" and do not attract the usual 17.5pc VAT. The loophole means that the retailer can undercut rivals and offer the latest DVDs for as little as £8.97. Earlier this year Tesco.com was forced to close its operation in Jersey after the Channel Island government refused to renew its licence following pressure from the UK authorities.
Although the retailer is now "posting" the DVDs and CDs from Zurich, it has no capability to process the orders in Switzerland. It is understood that the orders are being processed and the envelopes packed in west London by distribution firm EUK before being shipped to Zurich.
MP Jim Dowd, who is chairman of the All-Party parliamentary group for small shops, said: "Small retailers just don't have a chance. This is not in the public interest and it is not fair competition. If Tesco thought it was cheaper to ship CDs to Tanzania and back I'm pretty sure it would."
Tesco said: " Following changes in local legislation in Jersey and so that we can continue to offer these great prices to our customers, the fulfilment operation of this business is now based in Switzerland."
posted by tescno at
12:19 pm
