UK-BASED internet company the Hut Group is selling CDs and DVDs from Guernsey in defiance of Commerce and Employment policy.

The company, which has just brought the Zavvi brand, already acts as a third-party operator for other companies using the de minimis ruling, which means it can send some goods worth less than £18 to the UK from the island without attracting VAT.

The Hut is UK-based but has a Jersey-registered entity that trades through Guernsey.

‘Fulfilment of CDs and DVDs for UK retailers through third-party operators on Guernsey is not supported as part of C&E fulfilment policy,’ said a Commerce and Employment spokesman.

‘The policy is focused on CDs and DVDs as this is the primary point of concern for HM Government.’

The policy and an industry code of conduct have been created and adopted as part of a collaborative approach to working with the UK Government to address its concerns.

It is a subject that has attracted condemnation from MPs, who see the practice as harming the UK high street.