Some EU specialist online retailers have said they will no longer deliver to the UK because of tax changes which came into force on 1 January. Bicycle part firm Dutch Bike Bits said from now on, it would ship to every country in the world except the UK. "We are forced by British policy to stop dealing with British customers," it said on its website. Another firm, Belgium-based Beer On Web, said it was now shunning the UK "due to the new Brexit measures".
The companies are angry because they now face higher costs and increased bureaucracy in order to comply with UK tax authorities. However, it is unclear how many have taken the drastic step of refusing all UK orders. At the same time, international shipping companies, including Federal Express and TNT, have said they are levying additional charges on shipments between the UK and the EU. They said this reflected the increased investment they had had to make in adjusting their systems to cope with Brexit.
The moves follow changes in VAT rules brought in by HM Revenue and Customs on 1 January. VAT is now being collected at the point of sale rather than at the point of importation. This essentially means that overseas retailers sending goods to the UK are expected to register for UK VAT and account for it to HMRC if the sale value is less than €150 (£135).
A government spokesperson said: "The new VAT model ensures goods from EU and non-EU countries are treated in the same way and that UK businesses are not disadvantaged by competition from VAT-free imports. "The new system also addresses the problem of overseas sellers failing to pay the right amount of VAT on sales of goods already in the UK at the point of sale, raising an anticipated £300m every year.
"Many EU businesses which currently sell goods to UK customers will have already registered for UK VAT under existing rules and HMRC is working very closely with those who haven't to ensure they can comply with the changes."
Tackling evasion
Adam French, consumer rights expert, said consumers would be "frustrated" if the new VAT rules were applied in a way that causes significant inconvenience. "It's vital the government makes it clear to consumers as well as traders what the changes as a result of Brexit mean for them and how they shop. It should also work to ensure UK consumers can retain access to a wide range of competitively priced and quality goods."
Campaigner Richard Allen, founder of Retailers Against VAT Abuse Schemes, said that the massive increase in international online shopping had led to VAT evasion on a huge scale. He said the new HMRC rules were aimed at tackling that, but it was unclear how firms who failed to register for UK VAT would be dealt with.
