Close tax loophole used by Chinese fashion sites, urges Next chief

THE boss of Next has called for a crackdown on a tax loophole used by Chinese fast fashion websites such as Shein.

Lord Wolfson said the issue of fast fashion companies avoiding customs bills by shipping individual orders directly from China “needs to be looked at”. The Next chief executive said: “I wouldn’t underestimate the difficulty and the administrative complexity of trying to tax lots of small deliveries.

“But I think it’s important that the Government look at it.”

It comes amid a backlash from British retailers. The Telegraph revealed earlier this month that high street bosses were pressing ministers to close the loophole.

Companies including Shein are accused of exploiting the system by shipping directly to customers from China in smaller parcel sizes, rather than sending stock in bulk to warehouses in the UK and then distributing orders from there. This typically means they are not required to pay customs duties: parcels worth less than under the £135 escape tax while shipments above that value incur import duties on a sliding scale reaching up to 25pc.

British rivals claim this tax “loophole” allows overseas operators to undercut them. The Retail Sector Council

has called for restrictions on this practice. It said in a discussion paper: “It is to the detriment of the economy and to the outlook of those retailers that pay full taxation, including VAT. Without the playing field being evened, there will be more business failures, less taxation and more unemployment.” Shein argues that its success “comes from our ability to produce fashionable products for our customers”.

A spokesman has said its “on-demand business model and flexible supply chain” enables it to keep prices low and offer customers the best deal.

Lord Wolfson’s call for action came as Next delivered strong annual results, with profits hitting a record high.