Independent Retailers Urge Government to Tackle VAT Fraud and Close the £135 Duty-Free Import Loophole — Why the Issue Matters and How 4 Eyes Ltd Can Help
The British Independent Retailers Association (BIRA) has echoed Amazon’s warning that the UK is losing hundreds of millions of pounds each year due to VAT fraud by overseas sellers operating through online marketplaces. The problem is now so widespread that it is eroding fair competition and placing compliant UK retailers at a significant disadvantage.
Estimates suggest that VAT evasion linked to non-UK sellers accounts for up to £700 million in lost tax revenue and is associated with over £3.2 billion in annual sales. Many of these sellers avoid UK VAT altogether, under-declare values, or exploit weaknesses in marketplace oversight.
An Increasingly Uneven Playing Field
While UK retailers must charge and account for VAT on all eligible sales, some overseas competitors can effectively undercut prices by 20% simply by not following the rules. This puts immense pressure on independent retailers already facing rising costs and economic uncertainty.
BIRA and Amazon are aligned in calling for a clear solution:
✅ Require VAT collection on all online marketplace sales — regardless of where the seller is based.
This would reduce fraud, improve enforcement, and level the retail playing field.
The £135 Duty-Free Threshold: Another Major Structural Problem
Alongside VAT fraud, BIRA is urging the Government to take action on the £135 duty-free import threshold, which allows goods valued under £135 to enter the UK without customs duty. This rule, originally introduced to simplify post-Brexit operations for low-value consignments, now gives non-UK sellers a structural price advantage.
Low-value goods imported in bulk through fast-growing platforms such as Temu, AliExpress, and other overseas marketplaces typically fall beneath the threshold — incentivising undervaluation and pushing UK retailers further into a competitive corner.
Why This Matters for Your Business
For UK retailers and importers — especially SMEs — these two factors combined result in:
Unfair competition from suppliers not charging VAT or duty
Distorted online pricing that UK sellers cannot match
Compliance pressure as HMRC increases scrutiny on domestic businesses
Supply chain challenges due to inconsistent treatment of imported goods
How 4 Eyes Ltd Supports Retailers, Importers, and Marketplace Sellers
At 4 Eyes Ltd, we help UK and international businesses navigate exactly these issues. As specialists in UK/EU VAT advisory, customs compliance, and import/export strategy, we guide clients through the complexities of post-Brexit rules — ensuring nothing slips through the cracks.
We support retailers and importers with:
✅ VAT registration and compliance for UK & EU markets
✅ Advising overseas sellers on marketplace VAT obligations
✅ Managing import VAT, low-value consignment rules, and duty calculations
✅ Customs classification (HS codes), origin analysis, and valuation support
✅ Audit support for HMRC VAT and customs enquiries
✅ Supply chain structuring to optimise cost and compliance
✅ End-to-end support for businesses scaling into the UK and EU
As the debate intensifies over VAT fraud and the £135 threshold, it’s clear that businesses cannot afford to ignore compliance risk — or the opportunities created by clearer, more consistent trading rules.
Final Word
BIRA’s call for reform highlights a growing frustration across the retail sector. Unless the Government takes decisive action, independent retailers will continue fighting an uphill battle against non-compliant overseas competitors and structural loopholes.
In the meantime, businesses must ensure they are fully compliant, properly structured, and ready for whatever reforms come next.
If your business needs guidance on VAT, customs, or import-export compliance, 4 Eyes Ltd is here to support you with practical, specialist advice tailored to your operations.