Play.com, a popular site among online buyers in Malta, is to close down its own retail business in March and operate solely as a marketplace for other firms.

The decision was taken at the expiry of a tax loophole allowing cheap items to be sold to the UK VAT-free from the Channel Islands.

The company blamed the end of the Value Consignment Relief (LVCR) loophole which allowed items under £15 to be sold to the UK VAT free from the Channel Islands.

The move means it will no longer sell items directly to customers, instead it will allow other firms to sell goods via its marketplace which it launched in October last year.

Play.com said: ‘Following a strategic review of our business operations we have today announced a company restructure.

'Moving forward we are intending to focus exclusively on our successful Marketplace, which is our main business area, and to phase out the direct retail part of our business.

‘We would like to reassure our customers that they can continue to shop with us, purchase from an expanding range of products, and still receive the great quality of service they have come to expect.’

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