VAT changes to hit game prices?

As many of our Web-savvy readers know, shopping online lets you avoid the pushy salesman in Currys and is invariably cheaper than trudging down to your local store only to find what you want isn't in stock anyway.This is particularly true of games, CDs and DVDs, which are often several pounds...

As many of our Web-savvy readers know, shopping online lets you avoid the pushy salesman in Currys and is invariably cheaper than trudging down to your local store only to find what you want isn't in stock anyway.

This is particularly true of games, CDs and DVDs, which are often several pounds cheaper online thanks to an EU tax relief called "Low Value Consignment Relief" (LVCR), among other things. It applies to goods that are imported from outside the EU up to the value of £18 and allows those goods to be exempt from VAT.


Guernsey, not just about cows.

Now, the Guardian is reporting that the government may be attempting to crack down on retailers that base their online operations in the Channel Islands to then avoid millions of pounds in tax using this provision. Letters leaked from Treasury minister Stephen Timms shows that the government believes companies avoiding tax in this way "may be abusing rules."

Currently, nearby Crown dependencies the Channel Islands of Jersey and Guernsey are not part of the UK and as such are outside of the EU. They have become the base of many online retailers, such as play.com, TheHut.com, and high street retailer HMV, which moved its entire online operation to Guernsey in 2005.

A practice often used by retailers is to export goods from the UK to the Channel Islands and then post them back again to customers VAT free. Although consumers are able to make significant savings, the Treasury has estimated that VAT-free sales to the UK from the Channel Islands has created a £110m tax deficit, after sales grew to £620m last year.

HM Revenue and Customs is attempting to use a previous case involving the bank Halifax as a precedent to shut down the practice. In that case, the court established an "abuse of rights" principle that stopped the bank from using complex tax structures to gain an advantage on other banks.

Any ruling against the practice could have a significant impact on online retailers' bottom lines, and so consumers used to the low pricing available from online shopping, could face a rise in prices.

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Discussion

76 comments
FF_fan2004
FF_fan2004

Catholicism is worse as a religion for its atrocities in the past so much so that Mussolini bribed them with a Vatican state, or so I heard. Anyway he Guy Fawkes had the best idea agreed. If it did happen in the past I just wish it was for a better future... No, NO! A septic truck full of s@#% at Westminster will do the trick. Saints Row 2 style.

drdoris
drdoris

kugliim Posted Aug 18, 2009 9:56 am GMT Plus is DVDs, CDs and games are more expensive, people will by less and they'll lose money anyway. IDIOTS!! LONG LIVE GUY FAULKS!! HE HAD THE BEST IDEA!! Guy FAWKES had the best idea? Making everybody become catholic?

FF_fan2004
FF_fan2004

Politicians need a boot up the a@#e, now that's politics. If that's not going to last painfully, this one will. Get a trained dog to bite them in the nuts and drag it.

FF_fan2004
FF_fan2004

That's really rich coming from the government, when: They put extra 2p on fuel duty They claim massive expenses Pass ridiculous laws from EU via the backdoor Raise council taxes Tax us heavily Tax at insane rates that's putting small UK businesses out one by one, that they won't relieve them for the next coming year!

Dynamo11
Dynamo11

Oh for crying out loud! Now the government is trying to destroy the little British based companies.

SadPSPAddict
SadPSPAddict

Another example of the government trying to bleed us dry! Come guys kill off all industry - you know you want to!!

pgmonkeeuk
pgmonkeeuk

Are they only just waking up to this now? My God, it's been going on for years! Most big High Street retailers, even supermarkets, shift a portion of their online business for small value goods to people who are based in the Channel Islands to avoid paying the VAT levy. Amazon do it, Tesco do it, Asda, DSG (Dixons/Currys), WHSmiths and the online versions of ex-High Street traders Zavvi and Woolworths do it also etc etc Moonpig.com's whole company profile is based around this one loophole. I don't think it'll affect the consumer all that much in the long run. High Street companies rip us off for our goods with or without changes in tax.

andy_lyall
andy_lyall

Scary thing is, the people who will get hit the most by this is the developers. Retailers won't adjust their price for fear that sales will drop meaning they'll charge more from publishers who will want to keep their margins steady. Who can the publishers get their money back from? Developers who rely on them. Publisher free digital distribution for the win.

kugliim
kugliim

Plus is DVDs, CDs and games are more expensive, people will by less and they'll lose money anyway. IDIOTS!! LONG LIVE GUY FAULKS!! HE HAD THE BEST IDEA!!

kugliim
kugliim

[This message was deleted at the request of a moderator or administrator]

beedlezebub
beedlezebub

Wha!? Really? This Government have WAY bigger problems to deal with than sorting out a couple of online retailers. We may not be the highest taxed country in the EU but still up there near the top. I can think of many more ways on saving millions of pounds worth taxes. This Government sucks!

flyingteddy
flyingteddy

no surprise really, its a loophole that companies have been exploiting.

penpusher
penpusher

@hannify I was just having a rant, really couldnt care less about denmark or sweden I still pay a s*** load of crippling tax already, I dont want to spend more

penpusher
penpusher

this realy annoys me, we are already the most highly taxed county in the EU! Our government is getting more revenues from tax per person than any other EU country so why is it so important to force ven more upon us? We arent all rich Mr Brown

zeniftan
zeniftan

As a gamer this annoy's me quite abit. But as a member of this fine island I call home and England. I would see this as actually the retailer trying to make a quick buck. It does seem kind of dirty of them to purposefully go out of their way to avoid tax. I mean, if you want to sell something in our UK, you have to play by OUR rules. These companies are not. Besides. governmental officials are watched heavily when it comes to how much they are getting paid. They aren't lining there pocket's, as we have special organisations that are designed to make sure that this dosn't happen. Also. It is stealing from the country if you don't pay taxes. How does it feel to have lost £620 million UK gamer's? (Who pay taxes, that is)

tatu2004
tatu2004

if they start doing crap like that then game sale's will slump big time...

Ashman555
Ashman555

dno if i relly wanna study games design at Uni now :|

kegmiester
kegmiester

I guess they're trying to milk the gaming cash cow that is our industry (after all, its one of the biggest) for all its worth. But this time they're not content with just the milk, they want the meat as well. UK games industry is already pretty fragile with UK developers disappearing everywhere and the price of games in stores don't help. Hell, it'll probably push the few people who would buy games legally to turn to other means.

Bigcol1611
Bigcol1611

How long have these retailers been based in the channel islands??? Years!!! And now because we are deep in this 'recession', the UK government thinks by claiming back all that lost VAT, we will climb out of the 'recession'? They werent complaining 3 years ago when the on-line retail market was booming, were they??

stuarthanley
stuarthanley

The UK Government are a bunch of thieving scum-bags who are only interested in lining their own pockets by screwing over the tax payer and the hard working employee.

Chaos_Eagle
Chaos_Eagle

Don't worry everybody, the deepest depths of hell are already reserved for greedy money-grabbing idiots like our government. The bad part is that this is no consolation =/

JBjazzbo
JBjazzbo

[This message was deleted at the request of a moderator or administrator]

Ardiendo
Ardiendo

No more £17.99 games at play.com? :(

ibz_007
ibz_007

The govermet should be the last people to talk about "abuse of rights". It makes me really angry how hypocritical they are.

blakeney
blakeney

Im so glad to see that atleast one "circle" im in knows the freakin score!!! They (the goverment) seriously do belive that in 5years time and a few fancy adverts later we will forget about all this money thievery thats been goin on! its not jus labour its ALL of them(infact anyone that knows the remotest bit about REAL politics will know that gorden brown was the ONLY person with a plan for the resesion that was incomming like 4years down the line, he was trying to get the house of commons, not just labour, to listen to what he was saying and act upon it. they didnt and now its his fault! i dont belive that becuase i KNOW otherwise!).The next 5-10 years is the time for us to let them know we wont accept it, otherwise quite simply we have accepted it and they get away with it and carry on making crazy taxes out of thin air, to (as we now KNOW) line thier greasy blood filled pockets!

Avenger1324
Avenger1324

want to know another way to save 110m? Stop MPs claiming expenses, and make them pay tax.

D_Bug
D_Bug

Good foresight from the government. Make us pay more and discourage us from spending, just when they want the opposite...

Jedi_jester
Jedi_jester

Hmmm I hope there are different rules in Wales.... But I bet there aren't any :(

campbell153
campbell153

GOD DAMN IT!!! we get taxed enough in shoddy old England!

killfaXY
killfaXY

*sighs* I guess it's not like we're taxed enough as it was >_>

cikame
cikame

Make expensive games more expensive..... go figure.

1FedUpGamer
1FedUpGamer

*facepalm* this is why i hate the UK government. They want more VAT, i guess them spending millions of tax payers money on their families houses just wasn't enough.

jamesinho
jamesinho

tasty, go to canada. I hear good things. Especially of you work for games companies :D

airsoftmanic
airsoftmanic

im almost on the verge of driving into london, sneaking into parliment, and doing a flying kick at gordon brown. hes wasted oodles of money trying to keep the useless banks afloat, who then just give it all to the fat cats anyway, he's displayed his incompitance on countless occasions, he cant keep his cabinet in check, he expenses scandal (which was started way before he came to power) was handled so poorly a retard with an IQ of 10 could have done it better.......people of Britain, Viva La Revalution!

WasntAvailable
WasntAvailable

Dosn't anyone here think that being able to operate outside the UK while practically still operating within the UK and being exempt from VAT while being in direct competition with retailers that are not is not really a fair practice on the part of retailers like Play? I mean lets face it, it is a loophole, and it does give them an unfair advantage in competition that does come from abusing rules. I think they may have a point.

jamesinho
jamesinho

I'd mostly agree with benbenben. People forget how bad it was before for ordinary working people BECAUSE OF the tories with their poll tax and the sort. Right now we are in a global situation and no, I don't vote labour either after the 10 p thing (or even before it come to think of it). Anyhoo, personally, I love cheaper games. It is an immediate bonus, but if these companies pay the tax that we all pay then we will see other benefits, dare I say we might even be able to afford games more easily.

tastycasey27
tastycasey27

well this just goes to show how bad the UK has got. i was out of work because of a accident 2 years ago and cos i changed my NHS stamp duty payment over to a direct debit, i missed one payment, which wasnt my fault. That led to me not being able to claim sick money for the 3 months i was off in hospital, but on the other hand they wer willing to give mr joe terrorist whos burns the english flag in london loads of benifits for his 12 children and pay his rent. HMMM SOUNDS FARE TO ME. now they will hike up game prices to get extra money to claim back what they are losing from there own claim scandal. England sucks, im out of here as soon as possible. America seems like a nice place, maybe ill try there, or Canada.

ukBloodhunter
ukBloodhunter

I'm guessing this is how Play have their "Free Shipping on everything" thing going then, instead of VAT you pay for your shipping.. Play dont have massively lower prices than say, Amazon though

fatboy999
fatboy999

Holy crap... Decisive decisions?? No waaaaaaaaaaaaaaaaaay =O

Ninja-Hippo
Ninja-Hippo

what has gordon brown personally done to me? He's about one of the most dishonest, incompetent, dilusional and down-right immoral people in government today. That's what. :/

BenBenBen93
BenBenBen93

well the UK wouldn't have to do this if. 1. people to the education system for granted. 2. pretending to be sick (ie benefit fraud. which cost the Uk more that it military bill and school bill combined)3. if rich people stopped being so greedy and taking their money to Switzerland . i.e. what 1 billion in tax going to do to you f you have 15 billion?. and if this is going to turn into VOTE conservative thing. whenever a ressession hit them they rose taxes and created new taxes not to similar from labour. only labour get more money from rich people, whilst conservative save money by price cutting all the services. do we want care like it was 20 years ago i don't think so. and what has gordon brown personally done to you. oh that right nothing. don't hate just one man hate the whole government liberals and conservative an-all because if it wasn't for them whining all the time, decisions would of been a lot quicker and a lot more decisive

StarlightHunter
StarlightHunter

@Daman92, Don't get me started on that. Yeah they take our taxes and give it to Foreigners and lazy low life youghs who don't work, It bugs me off because us Brits the native population are beign forgotton and the taxes we pay which we worked our arses of for to pay just get given away to people like I said rather than puttign our taxes to use for example improving our education system.

thekodaman
thekodaman

Hah, ever since the recession hit the government have been trying to find new sources of revenue. For example they've been "cracking down" on tax havens such as the crown dependencies and attempting to get rid of tax havens within the EU in order to reclaim tax they previously didn't give a monkeys about. Then there's their planning on taxing in-game currencies on MMO's like EVE online which of course they also previously didn't care about either.

This is all symptomatic of a weak government which has realised that it's suddenly short of cash after wasting countless millions of pounds on failed schemes like ID Cards, the problem is not a lack of revenue, it's a wasteful, inefficient government that needs to be shown the door!.

Ashman555
Ashman555

If i had a 44 and was standing 1 meter away from gordon.... you can tell what i would do...

StarlightHunter
StarlightHunter

I'm getting annoyed with the government. A great old nation like us and our government sucks. We get ripped off more than any other country on the planet. Some games are sold for 59.99 and I think that is a discrace. I would'nt spend any more that 39.99 for a game and I don't care if the developer put their heart and soul into it or not.

Daman92
Daman92

Yay more of my money being taken from the goverment just to give to polish and foreign people, i must thank my gouverment for not looking after my country.

chainsaw888
chainsaw888

can our government get any worse? lets make a petition!...then burn down the houses of parliament