Post-Brexit shoppers pay a third extra to get hold of EU goods

Shopping in Wales

Tens of thousands of internet shoppers are being hit with unexpected customs, VAT and delivery charges on orders from the EU as retailers on the Continent struggle to cope with Brexit red tape.

British customers are facing demands to pay up to a third extra to release their goods from bonded warehouses once they arrive in the UK.

The delivery company DPD asked one shopper to pay £77 in tax and charges to release £245 of clothes bought from a French website.

Customers say they are not being advised at the checkout that they will be liable for extra costs and many are refusing to pay, forcing delivery companies to return the items.

The problems have been caused by rules introduced since the end of the Brexit transition period that require VAT on purchases from the EU to be collected at the point of delivery if the goods cost more than £135. There may also be customs duties if the goods originated, or partly originated, outside the EU.

In many cases retailers themselves are unaware of the rules. In some cases customers may be paying VAT twice — the local rate at the point of sale and the UK rate at the point of delivery.

Customers buying goods from the EU worth less than £135 should not have to pay VAT at the point of delivery because the retailer should levy the tax and account for the sale to HM Revenue & Customs.

However, many EU retailers have failed to register with the taxman and some shoppers have reported being asked to pay VAT for delivery of lower-value items. HMRC insists that these demands have been made in error by the courier companies.

Delivery firms are also adding their own charges to cover the administration costs of collecting the taxes. DHL charges 2.5 per cent of the liable VAT and duty with a minimum fee of £11. Royal Mail charges £8.

Haider Abdo, the chief executive of Returnado, a global returns management company, said: “We spoke to one EU company that generates labels for shipping and they said 80 per cent of their clients hadn’t yet filled out the forms to meet the new requirements. That accounts for several hundred thousands of retailer shipments to the UK every month.

“Smaller retailers have been caught out because when it dropped over Christmas they were in their busiest point of the year.”

The leading delivery companies have increased the cost of sending parcels between the UK and EU even if no duty or VAT is due because of the extra bureaucracy. Every parcel now requires a customs declaration form.

UPS is charging £5 extra per shipment and DHL Express is charging an extra 25p per kilogram, with a minimum extra of £4.50 per shipment.

One shopper, Louisa Walters, 52, faced a demand of £77.23 in tax, duties and charges after spending more than £240 on two items of clothing from Sandro, the Paris-based retailer.

The breakdown of the bill was £24.50 in duty, suggesting that the items originated outside of the EU, £46.73 in VAT and £6 in charges from DPD to administer the collection of the money. It was unclear whether a sales tax had been levied on the original order.

Ms Walters said she had no idea when she made the order that the items were coming directly from France. She said: “DPD offered me two options — pay the fees or return the package. There was no way I was paying £77 so I clicked to not accept the package. I was very disappointed.”

Experts predict that the situation will improve over the next few months as more EU retailers register with HMRC. However, some smaller retailers in the EU have already decided to stop selling to British customers.

A government spokesman said: “The new VAT model ensures . . . 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 when they sell goods in the UK. We anticipate this will bring in £300 million in tax every year to fund essential UK public services.

“Many EU businesses 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.”