Independent retailers association calls for action on VAT fraud and duty-free loophole

A leading independent retailers association has welcomed Amazon's call for urgent reform to tackle widespread VAT fraud by overseas sellers and is urging the Government to go further by closing the £135 duty-free loophole that is undermining British high street businesses.

The British Independent Retailers Association (Bira), who work with over 6,000 independent retailers across the UK, has long campaigned against the unfair competitive advantage given to overseas sellers through VAT fraud and duty-free import rules.

In an unprecedented move, Amazon has published a blog highlighting how current VAT collection rules are being systematically abused by overseas sellers who falsely register their businesses in the UK to avoid paying VAT.

This fraud is estimated to cost the UK Exchequer up to £700 million annually, whilst undermining legitimate British retailers who play by the rules.

Andrew Goodacre (pictured), CEO of Bira, said: "I never thought I would be saying well done to Amazon. 

“However, it appears that we are agreed on one issue – VAT fraud by overseas sellers using online marketplaces."

Under current rules, online marketplaces are legally required to collect VAT from overseas sellers.

However, many overseas sellers circumvent this by fraudulently registering their businesses in the UK, thus avoiding VAT obligations entirely.

Independent analysis estimates that up to £3.2 billion of sales each year across all UK online marketplaces involve this type of fraud, putting honest British retailers at a significant disadvantage.

Amazon is now calling for VAT to be collected on all sales through online marketplaces, regardless of where the seller is based – a position Bira has advocated for as part of its campaign to level the playing field for independent retailers.

However, Bira argues that tackling VAT fraud alone is not enough.

The association's wider campaign focuses on removing the £135 duty-free threshold for so-called low value imports – another policy that gives overseas sellers an unfair advantage over British retailers.

Mr Goodacre continued: "Along with VAT fraud, this rule is a root cause of unfair competition in the UK retail sector.

“We have asked the Chancellor to address this in the budget by removing the duty-free loophole and even adding a tariff.

“This country needs income, and money from this new tariff would also allow for a greater reduction in business rates.

“We fear the budget will be largely negative for small businesses, but this is one policy that could be a win-win for business and government."

Bira is calling on the Government to act swiftly on both issues – extending VAT collection rules to all sellers on online marketplaces and removing the £135 duty-free threshold for imports.

These measures would help protect the future of Britain's independent retailers and ensure fair competition in the UK retail sector.