Computer Giant Apple and the Guernsey Government are being reported to the UK Treasury over a planned move by the US firm to exploit a tax loophole by setting up in the Channel Islands.
The Forum of Private Business is fighting a campaign to close a Channel Islands tax loophole, which allows retail giants to sell goods under £18 VAT free back to the UK through websites in Jersey and Guernsey.
The FPB believe UK-based independent retailers are being undercut by the tax dodge with items such as CDs, DVDs, computer games and contact lenses being sold between £3 and £5 cheaper.
If Apple sets up on the Channel Islands, the FPB say it will join a growing band of major names exploiting the position including Tesco, Asda, HMV, WH Smith, Woolworths, Boots, Amazon, and Doll0nd and Atchison.
The claim is that Apple could use the tax dodge to slash prices on computer and audio accessories as well as its music downloads.
The FPB's chief executive Nick Goulding said he was worried by the plans.
"If Apple goes ahead with this move it will send all the wrong signals to other major retailers that this loophole is ripe for the picking," he said.
"The FPB believes the Guernsey Government should refuse Apple permission to set up in its territory.
"Moreover we call on Gordon Brown to act against the loophole as a matter of urgency."