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Home » Featured, News

More woes for video game retailers as LVCR case is lost

Submitted by on Friday, 16 March 20123 Comments

Play logo More woes for video game retailers as LVCR case is lostYesterday the Channel Islands lost their judicial review against the end of Low Value Consignment Relief, or LVCR.

What does that mean, and why is it yet another blow to the video game retail industry?

LVCR was brought in back in 1984 with a single aim; help reduce administration costs as related to low-cost items from online retailers. LVCR became popular with companies like Play.com and Amazon sidekick Indigo Starfish as it allowed them to offer CDs, DVDs, books and video games at a cut price without losing profit.

UK-based retailers, however, thought this gave the Channel Islands – Jersey & Guernsey – an unfair advantage and so lobbied the HMRC to remove the assistance for that region. The HMRC agreed and decided to remove the relief as of April 1st 2012.

Lawyers from the Channel Islands travelled to London earlier this week in a last ditch attempt to overturn the Government’s decision to scrap the relief, arguing that it would be highly detrimental to their economy. Indigo Starfish had already put 200 of their staff on warning of redundancy before the appeal, and Play.com are said to be carrying out ‘detailed business and logistics planning’, suggesting that they may move their operations from the island to an alternate tax-haven.

It seems that the video game retail industry continues to find the going tough. With the well-documented woes of the GAME group, and this latest blow to Channel Islands-based online retailers like Play.com (one of Jersey’s best employers), it may be a while before the industry bounces back.

Follow up: Why bricks and mortar stores are celebrating the LVCR ruling