Play.com stops selling direct
Closure of lucrative tax loophole means a major business model shift
Play.com has announced that it will no longer make direct seller, as a direct result of the closure of the Channel Islands' VAT-loophole. Instead the company will continue as an online marketplace for third-party sellers instead.
Play.com, based in Jersey, had previously used a rule known as Low Value Consignment Relief (LVCR), which meant that the company didn't have to pay VAT on good worth less than £15. It allowed the company to undercut UK-based companies, which many saw as unfair.
Following a campaign by UK businesses, HM Revenue & Customs closed the loophole in April 2012, requiring all Channel Islands-based companies to pay the same rate of VAT as on the mainland. As a result of the changes, Play.com sees no benefit of continuing its operations on Jersey.
Rather than close completely, however, the company will be expanding its Play Marketplace business which allows third-parties - either businesses or individuals - to list items they own for sale through the site.
Currenty, Play.com still sells items from its warehouses, but as stock is depleted the option to buy from Play.com itself will be removed in favour of directing customers to third-party marketplace sellers.