VAT rise 'may be good for Guernsey'

Guernsey could benefit from the rise in value added tax (VAT) in the UK, a tax expert has said.

UK Chancellor George Osborne announced in his first budget on Tuesday that the rate would increase to 20%.

Tony Mancini, a tax director at KPMG, said the decision could be good news for Guernsey companies that export VAT-free goods to the UK.

Mr Mancini said the rise could make Guernsey more attractive to companies looking at operating from the island.

However, he said the combination of more transactions and the higher rate could prompt Her Majesty's Revenue and Customs to consider changing the current arrangements, which allows items costing less than £18 to be sold VAT-free as the islands are outside the European Union.

Mr Mancini said from a local perspective the budget was not as bad as it could have been, and he believed Guernsey will continue to see a trickle of people wanting to move to or do business with the island as a result.