EU based retailers advertising ex-VAT online prices to UK consumers

[adrian@inspyer]

Hi,
I'm looking for some advice on who to contact / what to do about EU based retailers advertising ex-VAT online prices to UK consumers in our maket vertical (domestic decorative lighting).

Specifically the EU retailers are using paid Google Shopping ads, set to target UK consumers, and the prices are displayed as ex-VAT in both the advert and on their website. Some do not even disclose they are ex-VAT (and ex-customs duties) on the product pages on their websites. You only find out they are ex-VAT if:
- you find the link to their T's & C's, buried in the footer of the website, and read through them thoroughly, but who does this for an online purchase these days!
- the consumer gets a bill for VAT & customs duties from the courier (DPD / UPS / DHL etc)

So the issues here are:
- the EU retailers are actively targetting customers of UK businesses with prices that are at least 20% cheaper
- UK retailers are suffering through the loss of business to these companies
- UK consumers don't realise they are buying from an EU retailer (many have 0800 numbers and a .co.uk or .com website, display prices in £ and are all in English)
- the consumer invariably has to pay a significant additional and unexpectd bill (VAT) from the courier to get the goods
- if consumers refuse the goods then they have the shipping costs deducted from their refund
- if consumers return the goods then they have a huge shipping bill to ship back to the EU

We have contacted Google to report the adverts as misleading but, unsurisingly they havent done anything about it.

Is this practice illegal?

What can be done?

Thanks
Adrian

 

[DontAsk]

Is it any different to UK companies advertising ex-VAT prices to EU customers?

 

[Pish_Pash]

It's not illegal...the overseas sellers are doing as they should, removing the VAT element for customers outside of their own country.

Of course, there will be a VAT charge for the UK customer when it arrives ...that VAT will go to the UK treasury) ...but the end result is pretty much the same as if the UK customer bought from a UK business (VAT applied upfront if they'd bought within the UK vs. VAT applied/charged when it arrives in the UK). There may be a small customs charge...and likely an admin charge for collecting the VAT/Duty ...but that's not on the overseas seller...that's on the UK buyer to do their own research before importing.

if you're miffed at this...start advertising your products in the EU ...they'll show there with no VAT applied.

 

[John Martin]

I'm no expert but here's an AI answer, so take this for what it is and do your own due diligence...

The UK's Consumer Protection from Unfair Trading Regulations 2008 (CPUTRs) prohibit unfair commercial practices, including misleading pricing. The UK's Consumer Rights Act 2015 also requires traders to provide clear and accurate information about prices, including any additional costs.

The EU retailers' practice of not clearly disclosing that their prices are ex-VAT and ex-customs duties could be considered misleading. The fact that some retailers only disclose this information in their terms and conditions, which are often buried in the website's footer, may not be sufficient to comply with UK consumer protection laws.

To address this issue, you could consider contacting:

• The UK's Consumer and Markets Authority (CMA) to report the potentially misleading pricing practices.
• The Advertising Standards Authority (ASA) to complain about the Google Shopping ads, as they may be in breach of the UK Code of Non-broadcast Advertising, Sales Promotion and Direct Marketing (CAP Code).
• Trading Standards, a local authority service that enforces consumer protection laws, to report the issue and seek their advice.

It's also worth noting that UK retailers who are affected by this practice may want to consider lobbying their local MPs or trade associations to raise awareness about the issue and push for stronger enforcement of consumer protection laws.

____

Quite some years ago there were issues surrounding non UK ebay/Amazon sellers who were lying to HM customs about the value of their goods in order to avoid paying VAT. Amazon & ebay knew full well this was going on but did nothing about it. It's estimated that between £1-1.5 billion was lost in VAT revenue. It was only after a number of UK sellers got their MP's involved that the law was eventually changed.

 

[Customs Geek]

The below applies to goods from anywhere in the world not just the EU.

If the goods are below £135 then the overseas retailer should be registered for VAT in the UK and charge UK VAT at checkout. These goods are relieved of customs duty. No further VAT is charged at import.

Goods above £135 are charged import VAT and possibly duty as well on import into the UK. It’s entirely the retailers choice whether they sell with VAT etc being the customers responsibility or whether they pay it on their behalf and include it in their price.
Sorry but It’s also up to the consumer to check the T&Cs .
If the responsibility for payment of taxes and return policy are clearly there the retailer has covered their legal responsibilities.

In the case of the EU sellers saying ex VAT they may mean the price is excluding their local VAT , which is correct for goods being exported.

You could try contacting the advertising watchdog if you think the ads are misleading but I don’t know if they could do anything about a company overseas.

 

[scstock]

Sorry but It’s also up to the consumer to check the T&Cs .
If the responsibility for payment of taxes and return policy are clearly there the retailer has covered their legal responsibilities.

Absolutely, problem for the OP is that he's losing sales due to their EU competition not being transparent.

I've stopped B2C sales entirely as even when you try to point out in advance that there will be customs charges, Import VAT and Duty to pay they still refuse to pay it and then the package gets returned

 

[adrian@inspyer]

I'm no expert but here's an AI answer, so take this for what it is and do your own due diligence...

The UK's Consumer Protection from Unfair Trading Regulations 2008 (CPUTRs) prohibit unfair commercial practices, including misleading pricing. The UK's Consumer Rights Act 2015 also requires traders to provide clear and accurate information about prices, including any additional costs.

The EU retailers' practice of not clearly disclosing that their prices are ex-VAT and ex-customs duties could be considered misleading. The fact that some retailers only disclose this information in their terms and conditions, which are often buried in the website's footer, may not be sufficient to comply with UK consumer protection laws.

To address this issue, you could consider contacting:

• The UK's Consumer and Markets Authority (CMA) to report the potentially misleading pricing practices.
• The Advertising Standards Authority (ASA) to complain about the Google Shopping ads, as they may be in breach of the UK Code of Non-broadcast Advertising, Sales Promotion and Direct Marketing (CAP Code).
• Trading Standards, a local authority service that enforces consumer protection laws, to report the issue and seek their advice.

It's also worth noting that UK retailers who are affected by this practice may want to consider lobbying their local MPs or trade associations to raise awareness about the issue and push for stronger enforcement of consumer protection laws.

____

Quite some years ago there were issues surrounding non UK ebay/Amazon sellers who were lying to HM customs about the value of their goods in order to avoid paying VAT. Amazon & ebay knew full well this was going on but did nothing about it. It's estimated that between £1-1.5 billion was lost in VAT revenue. It was only after a number of UK sellers got their MP's involved that the law was eventually changed.

Thanks John, this is exactly my point, the consumer is being misled. I have already spoken to ASA and they have suggested speaking to the offending retailers ourselves to ask them to desist and the don't really bet involved in B2B issues, primarily just B2C complaints. I have also contacted Trading Standards, but no reply as yet... I will reach out to CMA as well (thanks for the suggestion) and also our local MP.

 

[Gecko001]

Is there no indication on the website that these items are being shipped directly from abroad to the customer's address in the UK?

 

[adrian@inspyer]

It's not illegal...the overseas sellers are doing as they should, removing the VAT element for customers outside of their own country.

Of course, there will be a VAT charge for the UK customer when it arrives ...that VAT will go to the UK treasury) ...but the end result is pretty much the same as if the UK customer bought from a UK business (VAT applied upfront if they'd bought within the UK vs. VAT applied/charged when it arrives in the UK). There may be a small customs charge...and likely an admin charge for collecting the VAT/Duty ...but that's not on the overseas seller...that's on the UK buyer to do their own research before importing.

if you're miffed at this...start advertising your products in the EU ...they'll show there with no VAT applied.

I totally understand that they have to sell ex-VAT if they're an EU retailer selling to UK, the same way we would if we sold from UK to an EU consumer. However, the issue here is about misleading the consumer with paid advertising targetting UK costomers. There is an obligation (a legal one I believe) regardless of where you are based, to not mislead customer as per the Consumer Protection Act, one requirement of which is to advertise prices that invlude VAT and other associated costs. So there is clearly some contention between the two legal requirements.

I would have thought that the soltions are either:

1: EU retailer doesn't do paid advertising targetting UK consumers with ex-VAT pricing. They could continue to display ex-VAT prices on the website and yes, unfortuneately it would be down to the consumer to read the Ts&Cs and establish the total cost if they went to the website 'organically' and purchased from them. But in this scenario at least the consumer isn't being targetted by businesses that pro-actively advertise with hiden costs.
2: The EU retailer registers for VAT in UK and can advertises how they wish with inc. VAT prices

 

[adrian@inspyer]

Is it any different to UK companies advertising ex-VAT prices to EU customers?

I totally understand that they have to sell ex-VAT if they're an EU retailer selling to UK, the same way we would if we sold from UK to an EU consumer. However, the issue here is about misleading the consumer with paid advertising targetting UK costomers. There is an obligation (a legal one I believe) regardless of where you are based, to not mislead customer as per the Consumer Protection Act, one requirement of which is to advertise prices that invlude VAT and other associated costs. So there is clearly some contention between the two legal requirements.

I would have thought that the soltions are either:

1: EU retailer doesn't do paid advertising targetting UK consumers with ex-VAT pricing. They could continue to display ex-VAT prices on the website and yes, unfortuneately it would be down to the consumer to read the Ts&Cs and establish the total cost if they went to the website 'organically' and purchased from them. But in this scenario at least the consumer isn't being targetted by businesses that pro-actively advertise with hiden costs.
2: The EU retailer registers for VAT in UK and can advertises how they wish with inc. VAT prices

 

[adrian@inspyer]

Is there no indication on the website that these items are being shipped directly from abroad to the customer's address in the UK?

Some have absolutely no mention of location, VAT or customs and they offer free shipping. You might be able to see where they're based if you read through their returns policy and see that the return address is Germany / Italy / Belgium etc.

 

[DontAsk]

I really don't see an issue, but have you tried asking Google about it, seen as it's them pushing out the ads?