Sony Computer Entertainment Europe Ltd  have been caught by the TaxMan. They have been declaring the Playstation 2 machines they import into this current to HMRC as Tax code 8471 (automatic data processing machines) which you don't have to pay VAT on on, HMRC got wind of this and have taken them to the high court after Sony appeled but HMRC won for once in court (miricles happen) and now they will have to be correctly classified as Taxcode 9504 (video games of kind used with a television receiver). Now Sony have to pay a hell of a lot of money back to the tax man in back VAT. I know one person who is really happy with this :-)

http://www.bailii.org/ew/cases/EWCA/Civ/2006/772.html

So i guess this means the price of a Playstation 3 is going to go up even more to help pay the back VAT?
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update...some facts i've been sent.

At issue was whether PlayStation2 qualified as a computer liable at a nil rate of duty or a video game player liable at 1.7% and whether Customs' liability decisions had been correctly and legally issued.

While 1.7% duty does not seem a great deal, the volumes and values involved and the EU-wide nature of customs duty liability means that very substantial sums can be involved, at stake for the period in dispute was some €50 million as under EU customs arrangements the UK's liability ruling applies to all Sony's EU imports.