HMV to sell VAT-free games

HMV will soon begin selling games in-store without charging VAT on them, thanks to a loophole in the UK tax laws, it has emerged today.

The high-street retailer will let shoppers use kiosks to order games, CDs, DVDs and Blu-ray films without paying the UK Treasury tax of 17.5 per cent, according to The Guardian newspaper.

The reason the company will be able to do this is because of the same loophole Jersey-based Play.com has been 'exploiting' for years.

The loophole allows retailers to cut the VAT charge off when importing products under £18 into the UK from outside the European Union, something the UK Treasury set up to minimise the burden on marginal trade.

Customers making use of the kiosks will have their items shipped free from Guernsey. HMV has said the items on sale will be restricted to stuff you can't get on the shelves, like out-of-stock games and so on.

HMV has revealed it made £50 million from VAT-free sales last year, equating to a loss of around £8.75 million for the Treasury.