Tesco launched Tesco Jersey last December as a means of driving down prices of non-food products, such as CDs and DVDs sold through Tesco.com. It is not alone among mainland retailers who source a range of items costing less than £18 without paying VAT.
“Tesco Jersey is popular with customers,” said a spokeswoman. “But clearly we will always operate within the law and we would, of course, respect any changes made.”
Asda, which set up a similar operation a month ago, played down the Jersey government’s warning, pointing out that it had only promised action against new ventures, not existing ones.
The Forum of Private Business, which opposes the practice, is meeting the Treasury about the issue. A FPB spokesman said EU rules allow the sourcing of VAT-free goods, although countries can opt out. “Another way might be to reduce the VAT threshold from £18 to a lower level.”