Yahoo Finance Shein’s London float under attack over tax move
Jeremy Hunt’s bid to convince Chinese fast fashion giant Shein to list in London is facing opposition from some of Britain’s biggest retailers.
High street leaders are understood to be lobbying ministers over Shein’s alleged use of tax loopholes, which comes as the retailer considers choosing the UK over New York for its planned $90bn float.
Complaints stem from Shein shipping directly to customers from China, as it imports parcels of a smaller size which helps them avoid paying the relevant taxes.
Rivals are alleging that Shein has exploited the tax system unfairly by doing so, allowing it to pay much lower customs duty bills than UK competitors.
Retail chiefs have recently launched a campaign to convince ministers to crack down on the practice, which they say disproportionately helps online retailers that import hundreds of millions of individual packages.
Spearheading criticism is the Retail Sector Council, which counts the bosses of Boots, Amazon and Sainsbury’s among its members.
It is co-chaired by Kevin Hollinrake, the parliamentary under secretary at the Department for Business and Trade, and former Co-op boss Richard Pennycook CBE.
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.
That followed reports that the US Securities and Exchange Commission could block Shein’s float in New York because of its close ties to China.
Anda Rowland, director of the tailor Anderson & Sheppard: “Bending over backwards for people who are bringing no jobs or skills to the country... I find it very confusing.”
A Shein spokesman said the company was “proud to support many aspiring fashion designers in the UK and around the world”.
Shein, which is based in Singapore, has offices in London and Manchester and is growing its headcount in the UK, having last year bought the British brand Missguided
Adam Mansell, chief executive of the UK Fashion & Textile Association whose president is the Princess Royal, said there was value in allowing companies to import low-value items, but said this should not apply to large-scale retailers.
