Online retailer makes move following the UK government's closure of a loophole allowing it to sell VAT-free CDs and DVDs from the Channel Islands
The company is reportedly making 147 staff redundant in Jersey as well as 67 in its Cambridge and Bristol offices as a result of the move, although the website still plans to continue operating its online marketplace, which allows a host of different retailers to offer their goods for sale.
Via Twitter, Play.com said: "We're only closing our direct retail business. You can buy from our successful Play Marketplace as usual."
Goods bought for less than £15 and imported to the UK from outside the EU – including the Channel Islands – were exempt from VAT under the Low Value Consignment Relief (LVCR). The loophole, which was thought to have cost the exchequer about £130m in lost VAT, was shut by the UK government in April 2012 - marking the end of years of campaigning by the Guardian and scores of UK retailers including the music chain Fopp and the healthfood group Holland & Barrett. They had repeatedly told the Treasury they were unable to compete with VAT-free prices online.
In 2006, Jersey claimed to have weeded out UK firms using the Channel Islands as part of what it called a "scam" to avoid tax. Tesco and Amazon were among those who left the island at that time, though both returned with the help of agent firms on the islands, such as Indigo Starfish and The Hut Group.
In September the States of Jersey said about 400 people had lost their jobs elsewhere in the island because of the end of LVCR.