Play.com shuts online retail arm after UK tax loophole closed

10/01/2013

Online music and computer game seller Play.com is to close down its direct retail business and shift to an online marketplace from spring 2013. The move will make more than 200 staff redundant, including 67 workers from its Cambridge and Bristol bases and 147 in Jersey. It says it has been forced to take the step due to the ending of Low Value Consignment Relief, a scheme which allowed items less than £15 to be sold to the UK free of VAT from the Channel Islands.

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The Government ended the tax relief scheme last April after UK-based retailers complained they could not compete with firms that did not have to factor VAT into prices.

The company was one of the first online retailers when it launched in 1998, and was bought by Japanese retail giant Rakuten for £25 million in 2011.

Play.com will become purely a marketplace for other sellers, and not sell goods directly to customers itself.

The company will take a slice of sales, similarly to the marketplaces operated by eBay and Amazon.


"Following strategic review of out business operation, we have announced a company restructure," said Play.com in a statement.

"Moving forward we are intending to focus exclusively on our successful Marketplace, which is our main business area, and to phase out the direct retail part of our business.

"The removal of LVCR implemented in April 2012 has been a determining factor in this decision."

Around 400 people are understood to have lost their jobs in the Channel Islands due to the end of LVCR in 2012.

This includes 16 people made redundant last July after Jersey-based flower delivery business Flying Flowers closed its doors.

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