BHETA – the trade association for the DIY, garden and housewares sectors – is calling for the UK Government to reduce the De Minimis threshold for duty of £135 significantly.
The De Minimis threshold refers to the value below which goods can be imported into a country without incurring customs duties.
In the last five years, there has been a sharp rise in the volume of products sold directly to consumers in the UK by overseas producers in ‘small parcels’. The inability of the Border Force to check most of these small B2C imports, has led to danger to consumers from unsafe product, massive losses in VAT revenue for the Government and huge difficulties for UK producers, who are unable to compete on a level playing field.
An estimated 100 million small parcel shipments arrived in the UK from overseas sellers in 2023, due to the rise of the internet and the rise of shopping giants like Temu, Shein, Amazon and eBay.
The inability of the Border Force to check most of these small parcels, has led to huge difficulties for UK producers who are unable to compete with unscrupulous producers who bypass all, or part, of UK legislation. This not only leads to an estimated annual £1billion in lost VAT (misdeclarations, understating the value of goods and seller non-compliance) just when the new Government is seeking to fill its ‘black hole’, but poses a direct threat to consumers in terms of product safety and consumer rights.
As examples, over 98% of fake i-phone chargers purchased via the overseas B2C route do not meet UK safety standards and there are numerous other electrical hazards, toxic materials, or mechanical failures, with another example being the recent spate of e-bikes catching fire. Bladed articles also arrive in the UK in small parcels undermining the Home Office and Police’s attempts to reduce knife crime.
Quite apart from the issue of safety, financial losses arise from UK consumers receiving faulty or counterfeit goods with no way to recover their money.
UK supplier and retailer impact
Associated problems are the adverse impact on environmental sustainability, intellectual property violation and economic harm to UK producers. The situation has created an advantageous position for overseas producers. Meanwhile UK producers and their employed staff grapple with standards, taxes and regulations to sell products in the UK including duties, VAT, plastic packaging tax, extended producer responsibility tax, age verification checks, safety certification and trademarking. All perfectly legitimate, but especially challenging when competitors from overseas do not have to comply.
Border Control is currently overwhelmed
The sheer volume of goods arriving in the UK via the small parcels route has seen UK Border Control and Trading Standards overwhelmed. As a result, most of the small parcels enter the country with minimal or no checks. Reports suggest that customs only manage to physically check around 3-5% of total shipments, with the rest being subjected to automated or random checks.
This has led to a reliance on technology and data-sharing initiatives to target high-risk parcels, leaving lower-risk items under minimal scrutiny.
There are other negative implications for UK PLC arising from the current status quo. An influx of low-cost, poor-quality products contributes to a throwaway culture, with many faulty goods discarded shortly after purchase and ending up in landfill. The increased volume of small packets disproportionately adds to carbon emissions due to transportation. Counterfeit goods also undermine intellectual property (IP) rights, which damage brand reputations and discourage innovation by legitimate companies, who face unfair competition from sellers of ‘knock-off’ products.
The BHETA campaign
With issues as big and wide-ranging as these, the BHETA small parcels campaign is advocating that firstly, the UK Government lowers the ‘De Minimis’ threshold for duty to below £40 matching many other countries including China 0, Hong Kong 0, Iceland 0, South Africa 0, Switzerland CHF5, Brazil 0 and Japan £50.
Secondly, the UK Government should make significant investments in the UK Border Force to facilitate comprehensive checks on imported small parcels. This should be financed by targeting the lost tax revenue from overseas producers.
BHETA’s chief operating officer, Will Jones said: “It goes without saying that there is a need for a competitive market that benefits consumers. However, the ‘small parcels’ challenge is undermining the market and creating a potentially dangerous and damaging environment that needs to be addressed.”
