When you buy a CD from websites such as Amazon, HMV, Play and most other online retailer ever wondered why they’re often shipped from the Channel Islands? The answer is so you can avoid paying the VAT – which goes someway to explaining why the few high street retailers of CDs just can’t compete with the Internet – online stores have the advantage of scale and the need for far fewer staff without being handed a 17.5% advantage. The Guardian reports

VAT-free CDs exploded at the end of last year, driving one in three purchases by British music-lovers on to the web. The surge in sales casts doubt over Treasury claims to be tackling the tax dodge, already thought to be costing the exchequer £110m a year and rising. Simon Bowers.

Much as I’ve appreciated purchasing CD’s cheaply it’s about time the Treasury put a stop to this loop hole – although the declining sales of CD’s will probably put paid to all but a few CD shops long before the treasury get’s its act together.