FREE to not TRADE
EU online retailers stop selling to UK consumers
Having only just written in glowing terms about The Revival Club, a boutique men's fashion brand based in Italy, I was disappointed but not surprised to see a mail from them titled, 'We'll be back soon'. I'm amazed that more has not been said about this latest development. Online retailers across the EU have stopped selling to UK consumers. What's going on?
It's all to do with value added tax (VAT), HM Revenue and Customs (HMRC) and where the tax is now collected.
Until the end of 2020, while we were still in the club, small European sellers were able to sell to private individuals in the UK under their local VAT number at their home country's VAT rate. For example, I paid 22% VAT on my Italian shirt and not the 20% UK rate. Sellers were all subject to a 'distance selling threshold' which depended on the country. There was no need to register for UK VAT to sell to UK consumers provided the UK threshold of £70,000 was not exceeded. Ironically, from July 2021, sellers in the EU dispatching their goods from a single country, will not be required to register for foreign VAT, the thresholds have been abolished. This is designed to close a loophole and collect more tax as a result.
But it's different here in the UK now we're out. HMRC is keen to catch its' fair share of VAT from 'Johnny foreigner' so European sellers now have to register for UK VAT even if they've been selling under the £70,000 annual threshold and on goods below £135 in value. And that's why an increasing number of EU retailers like Dutch Bike Bits are refusing to cooperate. They make the point that the UK is the only country in the world expecting a small business to pick up the tab to collect tax on behalf of its' government. To do it will cost them money which they're not prepared to pay.
For those of us still buying from the EU, don't be surprised to receive a nasty double tax bill, a present delivered by your friendly courier. A recent purchase from Sandro in Paris for £207 incurred a £53.92 bill from the courier. Either pay the tax bill which was split into 3 parts - custom duty £10.35 - import VAT, £37.57 - customs clearance fee £5 or your order is returned to sender and you can pick up the pieces with them.
Is there any upside?
In theory, the UK government could now abolish VAT. They were obliged to introduce it in 1973 when we joined the European Economic Community (EEC). No longer part of the 'EU VAT Directive' with a minimum VAT rate of 15%, the government could now set it to zero if they wanted. Perhaps they should take a leaf out of Australia's book who we’re being encouraged to do more business with. They have a 'Goods and Services Tax' of only 10%. How about it Boris?