The Government is set to review the tax regime surrounding the importing of low value goods. It is a decision that will help British businesses and remove some of the complexities surrounding the importing of goods into the UK.
Currently, goods with a value under £135 can be imported into the UK without paying any customs duty. It has led to claims that the UK is being ‘flooded’ with low value goods from China.
Several of the UK’s largest retailers, including Sainsburys and Next, have called for this treatment to end, arguing that it leaves them at a disadvantage to online retailers who send small parcels directly to UK shoppers circumventing the rules.
The Chancellor, Rachel Reeves, in reviewing the customs treatment of low value goods said that she is “standing up for the British high street against the dumping of cheap imports of products that undercut British retailers”.
The change in rules also follows fears that the UK is becoming a ‘dumping ground’ for low-value goods, predominately from China, that in 2023 reached more than one billion items.
In a press release issued by HMRC, retail entrepreneur Theo Paphitis said: “This is a much-needed injection of confidence for retailers and a common sense move to protect the UK economy. The sector has been crying out to level the unfair playing field and is a welcome, positive and strong step in the right direction by the Chancellor. This shows the government is listening and responding to UK business”.
Ruth Corkin, Indirect Tax Principal at Hillier Hopkins, who sits on several government advisory panels on VAT and import duties, welcomes the move, saying “It will remove some complexities as there are different rules for consignments under £135 and for over that amount, which are not always understood”.
She adds that “any changes must not, however, increase the administrative burdens on business or lead to parcels being unclaimed by customers in warehouses and postal depots”.
Ruth urges the Chancellor to keep a close eye on similar changes announced by the EU on the reform of its low value consignment rules, saying “divergence of any rules where goods are imported into Northern Ireland should be carefully considered and harmonised”.
Ruth Corkin has approached HMRC with a view to joining its stakeholder panel regarding these changes to ensure the voice of businesses and the accounting profession is heard.
