Wed, Mar 23, 2011 | 18:54 GMT
Tax loophole closure could see UK online game prices rise
The UK government is to hold a consultation on closing a tax loophole that allows online stores such as Amazon, Play and other major online stores to sell products, including games, at a deep discount by being based in Jersey.
Currently, major retailers including Amazon, Play, The Hut, Tesco Direct and HMV run their online operations from an area of Jersey which is free of VAT, meaning they can knock 20 percent off the high street prices as a starting point.
The loophole only applies to items under £18.
The end result is cheaper games and hardware online, but also means that the government loses out on billions of pounds in tax revenue.
Speaking in parliament as part of today’s budget, Chancellor George Osborne announced that the government will consult on the issue this May with an aim of countering “the continued marketing and use of highly aggressive and artificial tax avoidance schemes”.
If that happens, there’s a significant chance that the prices of games online could rise as retailers struggle to maintain profit margins.
Thanks, MCV.
15 comments
#1
Kalain
23/03/11, 6:10 pm
God I hope not. I get a lot of my stuff online and I really don’t want to pay store prices for something that isn’t in a store.
#2
tenthousandgothsonacid
23/03/11, 6:25 pm
George Osboutne is a massive fucking cunt
#3
tenthousandgothsonacid
23/03/11, 6:28 pm
In other news, I thought the loophole only affected items under 18 quid.
So, very few games at all…
#4
Cort
23/03/11, 6:41 pm
Yes, the VAT loophole only applies to products under £18. The article should be amended to reflect that fact, because at the moment it reads misleadingly.
The government is absolutely right to close this loophole. Companies such as Play and Amazon, as well as the supermarkets, use this tactic to increase their profits at the expense of UK tax revenues. And small retailers suffer because of it too. It should be noted that the profits from the Jersey operations are also kept well away from HMRC, so the companies pay less corporation tax too.
#5
theevilaires
23/03/11, 6:48 pm
^ LMAO CORT!
#6
DSB
23/03/11, 6:53 pm
It’s still a bit of a naughty signal to send while the UK games industry is dying off due to lack of incentives. According to another VG247 article, that’s squarely on this guys shoulders.
It’s not that businesses should be babied, but obviously other countries seem to be a lot more dedicated to attracting highly specialized, high tech industries like games developers.
And that means those who can’t counter it are very much fucked, since most of those are owned by international corporations who will gladly take it elsewhere.
#7
Patrick Garratt
23/03/11, 6:53 pm
@4 – I’ll edit it.
#8
Patrick Garratt
23/03/11, 6:55 pm
There.
#9
Ghost_Dog
23/03/11, 7:31 pm
It isn’t an area of Jersey that is VAT free. It’s the whole Island.
#10
Zurtech
23/03/11, 7:31 pm
Breaking news, Tories are still a bunch of twats!
#11
tenthousandgothsonacid
23/03/11, 7:37 pm
Typical Garrat ignoring my *earlier* comment
#12
Lounds
23/03/11, 8:01 pm
1p off fuel hasn’t helped George!
I first got a car in 2009 fuel was 92p a litre, now its £1.30+ wtf
how can it raise so fast in such little time
#13
Ghost_Dog
23/03/11, 8:10 pm
Claiming Amazon are based in Jersey is not right. They use a preferred supplier based in Jersey for a tiny amount of items.
The government loose about £80M from this tax hole, but it costs about £1M to fire a rocket in Libya at the moment. Perspective is required here people.
#14
Cort
23/03/11, 9:49 pm
The govenment doesn’t only lose the VAT Ghost_Dog, it also loses corporation tax on the vast profits of these operations, and the economy has suffered as smaller retailers (who are also employers) have struggled to survive – particularly independent shops.
The simple fact is, it’s wrong. It’s got absolutely nothing to do with anything else so it is intellectually lazy to draw comparisons with entirely unrelated issues.
#15
freedoms_stain
24/03/11, 12:10 pm
Tories have no major backers who operate from Jersey: Confirmed.
They probably need to close this loophole do they can afford to open up a nice new one that their rich chums can rape the shit out of.