Etsy sellers have stopped shipping items to the UK thanks to confusion over new complex VAT rules which came into force on January 1.
Etsy, the independent seller marketplace which has seen its revenue more than double since last year, has also been accused of being slow to change its systems to account for the new VAT rules, causing chaos for sellers outside the EU.
Under these new rules VAT is collected at the point of sale rather than the point of importation, meaning EU businesses exporting to the UK must register for UK VAT and account for it to the HMRC.
This essentially means that overseas retailers sending goods to the UK are expected to register for UK VAT and account for it to HMRC if the sale value is less than €150 (£135).
According to Business Insider, most Etsy sellers won’t need to register with the HMRC as online marketplaces (including Etsy, Ebay and Amazon) are able to collect VAT on smaller items on behalf of the sellers.
Etsy’s site states that the prices shown for UK buyers will be VAT-inclusive, adding that it will collect the tax where applicable.
Despite this, customers have complained of Etsy showing no indication as to whether it was collecting VAT, leaving them in confusion as to whether to ship to the UK and whether they should pay the tax.
Some went as far as stating they would avoid sending items to the UK altogether, a sentiment echoed by many independent retailers inside the EU since January 1.
One seller told Business Insider: “Etsy was supposed to automatically implement VAT starting 1st January and I had an order come in on that day from the UK.
“However when I printed the packing slip and invoice, it wasn’t reflected and my customer only paid for the item and shipping like usual. I read the forums and a lot of people said they didn’t get charged VAT either.”
Etsy says that it has now fully updated its systems to account for the VAT changes, meaning both sellers and buyers should see the tax reflected in prices and shipping slips from now on.