Indies call for VAT clampdown

Independent games retailers have urged the Government to make good on its promise to review the Channel Islands’ tax loophole.

Plans outlined during the 2011 Budget last week include reducing the upper limit on VAT-free goods, publishing a report and holding a meeting in May to discuss whether to remove tax avoidance schemes.

Online retail websites with warehouses in the Channel Islands – such as Tesco Direct, Play.com, The Hut, HMV and Amazon – currently don’t have to pay VAT on any goods sold for less than 18 to mainland UK, including budget video games and accessories.

The Government says this figure will drop to 15 from November, but many indie retailers want the VAT loophole to be cut altogether.

We think this is long overdue,” Grainger Games sales director Phil Moore told MCV.

We would like to see the loophole closed. It would potentially create a more balanced market for both online and bricks and mortar games retail.”

CHIPS’ joint MD Don McCabe added: The VAT loophole makes for a very unfair High Street. If the Government does decide to scrap it, this could provide the biggest boost to the economy in one fell swoop.”

Others are sceptical as to whether the Government’s potential scrapping of the Channel Islands loophole will prevent retailers from moving to other tax havens.

If you end the VAT loophole, surely retailers will move to Iceland which is currently outside of the European Union,” said Barkman Computers owner Nick Elliott.

MCV contacted all the major UK games retailers with the majority declining to comment.

A spokesperson for HMV told MCV: We’re digesting this announcement and evaluating any implications it may have for the business.”

HM Revenue & Customs estimates that 14bn was lost through tax avoidance and evasion in 2008.

The Government says cutting tax loopholes will help raise 1bn every year for the Treasury.

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