Budget delivers warning shot to Jersey traders

The tax loophole that has for so long allowed key online retailers to offer cheaper games is under threat.

It’s a practice that has been under the spotlight since as long ago as 2005.

Chancellor George Osborne has announced as part of today’s budget that the Government will consult on the issue in May 2011 with the aim of examining proposals that would counter "the continued marketing and use of highly aggressive and artificial tax avoidance schemes".

The most likely outcome is an extension of current measures to enforce enhanced clampdowns on the retailers.

"Subject to consultation, the Disclosure of Tax Avoidance Schemes (DOTAS) regime will be extended to enable the listing of specific tax avoidance schemes for direct taxes so that the subsequent use of such schemes will carry consequences for the user," the Budget document reads.

The Government hopes that changes to tax avoidance could net the Treasury as much as 4bn over the next four years.

Retailers operating out of Jersey include Play.com, Amazon, Tesco Direct, HMV and The Hut.