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Tax loophole closure could see UK online game prices rise

Wednesday, 23rd March 2011 18:08 GMT By Alex Donaldson

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.

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15 Comments

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  1. Kalain

    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.

    #1 3 years ago
  2. tenthousandgothsonacid

    George Osboutne is a massive fucking cunt

    #2 3 years ago
  3. tenthousandgothsonacid

    In other news, I thought the loophole only affected items under 18 quid.

    So, very few games at all…

    #3 3 years ago
  4. Cort

    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.

    #4 3 years ago
  5. theevilaires

    ^ LMAO CORT!

    #5 3 years ago
  6. DSB

    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.

    #6 3 years ago
  7. Patrick Garratt

    @4 – I’ll edit it.

    #7 3 years ago
  8. Patrick Garratt

    There.

    #8 3 years ago
  9. Ghost_Dog

    It isn’t an area of Jersey that is VAT free. It’s the whole Island.

    #9 3 years ago
  10. Zurtech

    Breaking news, Tories are still a bunch of twats!

    #10 3 years ago
  11. tenthousandgothsonacid

    Typical Garrat ignoring my *earlier* comment ;)

    #11 3 years ago
  12. Lounds

    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

    #12 3 years ago
  13. Ghost_Dog

    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.

    #13 3 years ago
  14. Cort

    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.

    #14 3 years ago
  15. freedoms_stain

    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.

    #15 3 years ago