THE future of Jersey-owned companies selling music and videos online VAT-free into the UK market is at risk because of a policy change from Economic Development, says Deputy Geoff Southern.

He said that the policy change put into effect earlier this year now means businesses such as Play.com – owned and run by local entrepreneurs – are at risk while high street big boys such as Tesco are looking at relocating to other jurisdictions such as Switzerland to avoid charging VAT.

Economic Development Minister Philip Ozouf will be asked to justify his decision to label sectors of the fulfilment industry a ‘sham’ when he appears before the Deputy Southern-chaired Economic Affairs Scrutiny Panel tomorrow.

Partly as a result of pressure exerted by groups representing UK high street retailers, the minister decided in February that major brands such as Tesco would not be allowed to use Island-based fulfilment companies to sell DVDs, CDs and other products into the UK market at below the £18 VAT de minimus limit.

Deputy Southern said the minister should have been defending the industry as legitimate and robust instead of bowing to outside pressures.