Shein accused of manipulating customs declarations in UK Lawsuit

Mere days after 25 European consumer organisations filed a complaint against Shein over misleading practices at the beginning of the month, the Chinese ultra-fast fashion giant finds itself in the crosshairs again.

This time, the online shopping giant faces a High Court lawsuit with documents accusing it of “manipulating customs declarations for VAT evasion” according to The Telegraph.

The claim was filed by customs agent IT Way Transgroup Clearance and Orange Transgroup, which acted as an agent for Shein between 2021 and 2024. The company is seeking damages amounting to 5.8 million pounds from Shein, claiming that the latter put it “under pressure and reputational risk” and “misrepresented parcel responsibility”.

Shein denies these claims. “The allegations that have been made against Shein are completely unfounded. Shein complies with all relevant laws and regulations in each market it operates in and will defend and pursue its legitimate interests rigorously,” according to a spokesperson.

De minimis loophole has been a thorn in the side of US, UK and EU businesses

However, the competition has been complaining about Shein’s practices for years, and not only in UK but also in the EU and US. The latter already clamped down on “de minimis” tax exemptions, meaning products under a certain amount (135 pounds in the UK, 800 dollars in the US or 150 euros in the EU) are exempt from import duties. However, VAT is always charged, regardless of the value of goods. Subsequently, Shein has raised its prices in the US.

The UK is considering closing the loophole, with chancellor of the exchequer Rachel Reeves pledging to review it. The EU is also currently revising its de minimis rules in view of unfair competition for European businesses, potential safety risks and revenue loss for customs authorities.