The owners of etailer Play.com have played down the significance that the much previously reported Channel Island VAT loophole has in the success of their business.
As much previously reported, the VAT loophole comes about because the company has a base on the channel island of Jersey, where companies can sell products under £18 - ie most CDs - to UK customers without paying VAT. The loophole, used by Play.com and many of their mainstream competitors in the CD mail order sector, has come under increasing criticism from independent retailers who say it gives major players an unfair advantage. Both Jersey and UK authorities have indicated they may close the loophole, though, it has to be said, they ain't done much about it.
Asked if the closing of the loophole would have a big impact on their operations, Play.com owners Richard Goulding and Simon Peree told the Sunday Times that the sale of products under £18 only accounted for a portion of their overall opertations, so it wouldn't have so big an impact. Goulding: "There's a lot of misinterpretation about that. We pay VAT on the vast majority of our goods. We have moved on [from CDs and DVDs] to sell a lot of products that cost over £18. It would not be particularly damaging to the business at all [if the loophole was closed]. It might mean we put 50p on the price of a [CD or] DVD or something. It affects a minority of our products. Our fastest-growing categories are electronics, PCs and mobile phones; the growth in these is vastly outstripping CDs and DVDs. It wouldn't worry us".
In the same interview, the two Play.com men revealed that they plan to relaunch their site next year, and to expand into continental Europe. The all new Play.com will come with various new features, including the almost compulsory social networking element.
They were also asked about rumours they were considering floating their company. But the duo said they would only go that route if large amounts of funding were required for expansion, telling the broadsheet: "We don't need to float but it's always one of those questions. If we wanted to expand into three European countries at once, for example, then we might look at it".