HMV is one of the first large retailers to move its base out of the Channel Islands after the Government’s decision to close a tax loophole in the region.

The entertainment retailer said it will not be renewing the lease on its internet fulfilment centre in Guernsey when it comes to an end in July, as it is no longer viable.

HMV will consolidate the operations into its distribution centre in Merlin Park, Birmingham.

The Low Value Consignment Relief, which allows products priced £15 and below to be sold VAT free into the UK from the Channel Islands, comes to an end next month.

An HMV spokesman said: “For our online offer to remain viable and attractive to shoppers in what will continue to be a highly competitive market - particularly at a time when we are looking to develop a much stronger multi-channel offer - we need to seek greater business synergies and to further reduce our online operating costs.”

The move will put 46 jobs at risk. HMV has launched a consultation, which will consider alternative options to redundancies, such as redeployment to other roles within the business, potentially at the Merlin Park site.

Entertainment retailers and The Hut Group also have bases in the area, which took advantage of the tax exemption.