Online retailers face VAT loophole closure

<p>Online retailers, including Amazon, Tesco, and W H Smith, using a Channel Islands VAT loophole as a way of dodging millions of pounds of tax on the sale of CDs and DVDs are facing a crackdown, according to a leaked Treasury letter seen by the Observer.<br /><br />Previously, ministers have insisted online retailers&#39; exploitation of VAT relief on imported goods sold for less than &pound;18 was &quot;not a loophole&quot;, though the practice - particularly as it related to CDs and DVDs - was &quot;under review&quot;.<br /><br />Leaked letters from Treasury minister Stephen Timms reveal the government now privately believes British companies marketing goods sourced in the UK to UK customers at VAT-free prices may be &quot;abusing&quot; rules.<br /><br /><br /></p>