The HMRC said the fraud saw the group import mobile phones and computer chips from Europe, VAT free, which is legal.

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Mr Keen said the loss of a tax-loophole allowing Jersey companies to sell low value good to the UK VAT free had had a "massive impact" on his business.

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In the UK physical books are VAT free.

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He used false invoices to avoid paying tax on computer parts which were bought VAT-free in the Republic of Ireland.

BBC: HM Revenue and Customs

Israr Javid, 43, used false invoices to avoid paying tax on computer components, which had been bought VAT-free in the Republic of Ireland.

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In recent years, areas where the relationship has been strained include the loss of Low Value Consignment Relief, which allowed certain items to be sent to UK VAT-free, the ending of reciprocal health agreements and the clampdown on tax evasion, the latest move being announced in the UK budget.

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He pointed out his government had introduced the largest ever rise in child benefits, further benefits for pensioners, minimum income guarantee, free eye tests for pensioners, reduced VAT on fuel.

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Their evolving list of demands, hammered out in days and nights of sweaty argument, includes calls for higher direct taxes for the rich, lower VAT for everyone, more hospital beds, free nursery-school, rent control and cheap home-building enforced by the state.

ECONOMIST: Israel