Tesco dvd rental

Tesco beats VAT with Jersey cut-price DVDs

TESCO, Britain's biggest supermarket chain, has joined a growing list of businesses to set up CD and DVD distribution businesses in Jersey - a move that will save thousands of pounds in VAT.

Visitors to the Tesco website are now encouraged to click across to the Jersey-based service if they want to save "at least 10%" on the prices offered on the main Tesco.com website. There they will find chart albums and DVDs by artists such as Kylie Minogue selling usually for around Pounds 1 less than at Amazon.co.uk.

The new service takes advantage of the fact that Jersey does not charge VAT on goods sold in the island. These can then be imported into the UK under certain tax and Customs regulations which allow low- ticket items costing less than e22 or Pounds 18 coming from non-EU countries to avoid duty.

Tesco is doing nothing illegal.

A spokeswoman said: "We want to be able to give our customers a wide range of choices and in this case we can pass the savings straight on to purchasers."

Goods sold by Tesco Jersey are deemed "Community Goods", in other words in free circulation within the Customs territory of the European Union. Each DVD or CD is posted out singly in a separate package bearing a Customs declaration to avoid duty.

For every 100,000 CDs or DVDs costing, say, Pounds 10 each shipped out of Jersey the British Treasury loses out on VAT to the tune of Pounds 175,000. During 2004 Jersey expects to ship several million packages into the UK. Tesco is joining a growing band of e- tailerswho are moving their warehousing and mailing businesses, known together as fulfilment centres, to Jersey.

Choicesdirect.com, the offshoot of High Street rental chain Choices Video, moved its fulfilment operation there this summer joining such companies as Contact Lens Postal, Amazon UK and Play.com. Tesco said that the Jersey website would offer a limited range of albums and movies concentrating on the charts. It will continue to run its Tesco Extra site offering an extensive back catalogue.

A spokeswoman said: "Tesco Jersey will always be cheaper for people buying a single CD or DVD with its free post and packing, while Extra tends to attract people who buy half a dozen or so CDs which could work out cheaper in bulk once the PP is included."

Island finds idea fulfilling

THE migration to Jersey of distribution businesses serving Britain comes after the island's government set up a special economic study to develop new industries as its offshore financial services industry faces growing competition and more expensive regulation from the UK and EU.

Order fulfilment companies have been specifically targeted by the Jersey government and the state-owned Jersey Post, which has a dedicated unit to serve the new businesses. Bob Jones, managing director of Jersey Post Logistics, said: "Customs see fulfilment here as a well-managed business which allows them to devote resources to major matters like drug smuggling."