Reader Letter: "Where does Gordon Brown trade in his games?"

This letter was received in response to the recent controversy over alleged attempts by Sony to kill the used-game market on PS3 - which have been denied by the company - and our article last week outlining the legal problems with any such action by a publisher or platform holder.

Dear Rob,

The debate on second hand games trading is more likely to be settled by the Chancellor of the Exchequer than a First Party Console Manufacturer.

One of the most attractive aspects of trading in second hand goods (let alone games) is that they are VAT exempt. This means that where new and popular goods have a high perceived value the trader can turn good cash margin whilst seemingly doing the purchaser a favour. This works particularly well in a market where the trader offers the new and used items side by side.

The law on the VAT exemption was set up to allow free trade between British citizens at a local level. It negates the inevitable Black Market that would spring up if we were expected to pay tax on our small second hand transactions. In other words Gordon doesn't mind us selling goods out of the Car Boot or through the Local Paper.

Now Ebay has "blipped" the radar and The Treasury have taken note. Many a tax gathering brain is being employed to work out how the huge sums of money traded on line can become VAT or Tax liable. It is unlikely therefore that high street companies and PLC's trading in VAT exempt goods will escape notice for long.

I wonder how viable and important the sector is if it becomes 17.5% less profitable?

Yours sincerely,

Patrick Lorkin
Senior Account Manager
Activision UK Ltd