In a recent discussion paper, the group called for restrictions on the way that some online retailers avoid import duty by packaging products overseas in small quantities.
“It is to the detriment of the economy and to the outlook of those retailers that pay full taxation, including VAT,” the group wrote.
“Without the playing field being evened, there will be more business failures, less taxation and more unemployment.”
The issue was raised at an industry event attended by at least one government minister last week, with a senior retail executive publicly criticising the low levels of tax paid by businesses such as Shein.
Others have privately lashed out at the Chinese fast fashion outlet, with one FTSE 100 chief accusing Shein of “evading normal controls and tax thresholds”.
The most recent UK figures show its revenue hit £1.1bn in the 16 months to December 2022, paying just £2.3m in tax.
A spokesman for Shein said: “Shein’s success comes from our ability to produce fashionable products for our customers.
“We keep prices affordable through our on-demand business model and flexible supply chain. This reduces inefficiency, takes out wastage of material, and lowers our unsold inventory. We pass this advantage to our customers and this has driven our growth.”
The Treasury is understood to have been approached over closing the loophole ahead of the Budget, although sources said there were no imminent plans to introduce any changes.
Richard Allen, from the Retailers Against Market Abuse Alliance, said: “It’s almost as if the Government has lost sight of what customs duties are for.
“They’re there to protect our economy. There has to come a point where we think about the country and the economy, and all the money from those sales goes straight to China.”
The lack of action has fuelled concerns that the Government is prioritising plans to lure Shein to the London Stock Exchange.
It emerged last week that Jeremy Hunt met with Shein’s executive chairman Donald Tang earlier this year, during which the Chancellor urged the business to list in the UK.
Robert Johnson is a UK-based business writer specializing in finance and entrepreneurship. With an eye for market trends and a keen interest in the corporate world, he offers readers valuable insights into business developments.
