Tesco has been accused of sending DVDs and CDs to Switzerland so that customers can avoid paying VAT on goods.

According to reports in the Daily Telegraph, Tesco’s internet site Tesco.com ships CDs and DVDs to Switzerland so that they can be shipped from outside the European Union. Because the products are worth less than £18, they qualify for “low value consignment relief” so do not attract the usual 17.5% VAT.

Tesco.com used to distribute goods from Jersey but the Jersey government shut down the tax loophole last year.

The practise could also spark criticism from environmental groups after Tesco last year pledged to reduce its carbon footprint.

“Small retailers just don’t stand a chance,” MP Jim Dowd and chairman of the All-Party parliamentary group for small shops told the paper. “This is not in the public interest and it is not fair competition.”

Tesco confirmed that its Jersey business was now based in Switzerland.