For quite a while, there has been a strong rumour in the channel [no pun intended – Ed], that the government and/or UK courts would finally clog up a loop hole that has allowed companies to ship certain items to the Channel Islands, call it an export, claim back the VAT, then resend them (VAT free) to UK customers using a fixed-price Royal Mail contract. No more it seems. KitGuru gets down and dirty to wipe away the mud.

Jersey Royal potatoes only generate so much money. These Channel Islanders have been subsidising their incomes in ways that are likely to end soon. And it's no joke.

The poor Channel Island farmers could be in real trouble, because they have been subsidising their potato crops with packing and reshipping – using a loop hole in the VAT laws. Fixed price shipping ‘from the Channel Islands to the mainland at 50p a unit' from the Royal Mail has allowed this 21st century buccaneering to flourish and companies like Play.com have been built on the back of it.

Play.com was originally a Channel Islands-centred operation, but it will no longer be able to run software and games ‘out and back' to Jersey etc. This ruling could have a huge impact on Play.com's ability to trade (and others like them), but – ultimately – the take over by Japan mega-retailer Rakuten, could be the thing that saves Play.

This change to the way goods are shipped and taxed will, no doubt, help the UK high street stores like John Lewis, but could it be too late for HMV and Game?

Game has been having tough times with its policy of only choosing prime high street locations, while suffering a serious price/margin disadvantage compared to Play.com, while HMV's troubles are well known and documented.

KitGuru says: We really love Game as a store and have fond memories of HMV, so it would be nice if they survived. Expect some serious unemployment-related challenges in the Islands over the coming months.

Comments below or in the KitGuru forums.

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