Some EU online retailers have refused to deliver their products to the UK due to tax changes that became effective as the UK formally left the EU. Companies shipping to the UK are now faced with higher costs as they comply with the UK’s tax regulations. Rather than dealing with the increased bureaucracy and costs, retailers in some EU countries have refused to trade with the UK. However, it is still unclear what is the total number of retailers who have done so.
From January 1, 2021, tax changes became effective, according to which VAT is now to be collected at the point of sale. Overseas retailers who are shipping their goods to the UK have to register for UK VAT. If the sale value is less than £135, they have to account for it to the HMRC.
The move is expected to bring the UK about £300m a year from overseas sellers whose goods are already in the UK at the point of sale, which they previously failed to pay. Government officials also say that the UK’s new VAT model ensures that goods from European and non-European countries are treated in the same way.
Many EU businesses that sell goods to customers in the UK have already registered for UK VAT under the new rules, and others are in the process of complying with the changes. However, some firms have refused to bother with these changes and instead opted to take their business out of the UK. Bike Bits is a Dutch-based firm that deals in bike parts; its website says it won’t be dealing with British customers. Beer on Web, a Belgium-based firm, is also discontinuing operations with the UK.
Outdoor, which is based in Finland, has also stopped its delivery services to the UK. However, in this case, the suspension is only temporary and gives the company time to register for UK VAT and sort out the post-Brexit process of selling.
While the new rules are meant to tackle the massive VAT evasion previously made possible through online shopping, it is still unclear how businesses who failed to sign up for UK VAT would be dealt with. There is also the need to clarify how the VAT rules will be applied to reduce frustration for both consumers and traders.