Companies will no longer be able to benefit from Low Value Consignment Relief from 1 April 2012, the government has confirmed.

The tax loophole, which gives relief on products such as DVDs and greetings cards up to £15, comes at a cost to the government of £140m per annum.

According to government ministers, the ending the "exploitation" of rules by an increasing number of businesses will increase the level of fairness for UK businesses.

Moonpig, which was acquired by Photobox in a £120m deal earlier this year, has been a print success story, producing personalised cards from its Guernsey facility.

However the company was unable to comment at the time of writing.

Greetings cards rival Funky Pigeon, which is owned by WHSmith, is currently in the process of setting up a new facility in Guernsey but it is unclear how the new legislation will affect its business.

Exchequer secretary to the treasury David Gauke said: "These reforms will ensure that UK companies, especially small and medium-sized enterprises, can compete on a level playing field with those larger companies with the resources to set up operations in the Channel Islands.

"By making these changes, we are striking the best possible balance between the costs of collecting small amounts of VAT and protecting the interests of UK taxpayers and businesses."


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