Record store blames VAT avoidance for closure after 46 years

Rounder Records in Brighton, one of the UK’s longest-standing independent record stores, is to close its doors after blaming VAT avoidance by online retailers for forcing it out of business.

Customers tweeted their regrets after the store’s owners announced that the shop will cease trading after 46 years. Rounder’s business had been “decimated” by illegal downloading, recession and VAT avoidance by online competitors such as Amazon, the managers said.

The closure is another blow to the independent record retail business. The number of independent stores trading in the UK has slumped from 900 seven years ago to fewer than 300 today.

The Rounder statement read: “It is with huge regret and sadness that we have to announce that we are closing down. We will shut our doors at 6pm on Sunday 29th July after 46 years of being a record shop in Brighton Square.

“What we have always strived to do is to stock the best range of music at the best prices for our customers – sadly that is not enough for us to stay open.

“We are closing because we can't make it add up any more. We are a business that has been decimated by downloads (both legal and illegal), VAT avoidance by the big online retailers, a double dip recession, & the decline of the high street. Our lease has ended and we have nowhere to go.”

The Government has now closed a Channel Islands VAT loophole used by online retailers such as Amazon, Tesco and Play.com.  Online retailers had been shipping more than £500 million of CDs, DVDs and other postable goods to UK customers tax-free from Jersey and Guernsey for almost a decade.

The Treasury estimated that the Government was losing around £130 million a year in lost revenue because of the VAT rule, and ended the relief on low value goods sent through the Channel Islands on April 1 this year. But the move came too late to save Rounder.

Phil Barton, Rounder owner, said: “We tried everything to stay open, but the basic economics were killing us.”

The store had become “a social hub for a musical city, a place where future bands are born, where record labels are started, where local bands can stock their first release, where you can get tickets for gigs, where there’s something playing on the shop stereo that might be your new favourite band. Sadly, in 2012, this is just not financially viable.”

Rounder’s closure follows the demise of Second Layer, a north London outlet for underground rock and electronic music and Dada Records in Chiswick, during the past month alone.

Stores have been hit by a further slump in musical sales. The number of albums sold in the UK fell by almost seven million from the same period in 2011, according to figures published today by the British Phonographic Industry.

Although digital sales are up by 17.3 per cent the increase has failed to offset the continued decline in CD sales, exacerbated by a weak release schedule in the first half of 2012.