Getty ImagesThe boss of clothing chain Superdry says rival Shein is being allowed to “evade tax” and has urged the Government to take action.
Julian Dunkerton told the BBC the fast-fashion giant enjoyed an unfair advantage because low-value parcels it sent direct to customers from overseas were not subject to import duties.
Shein declined to comment but has previously said its success was down to its “efficient supply chain” rather than tax exemptions.
The Treasury said tax policy must balance the interests of consumers and retailers.
However, Mr Dunkerton said it was in the UK’s interest to close this tax “loophole”.
“These rules are not designed for a company to send a personal package. [and] “We had a turnover of £1bn in the UK and paid no tax,” said Dunkerton, Superdry’s founder and chief executive.
“Essentially, we’re allowing certain people to come in and become tax evaders.”
Goods valued at less than £135 sent directly to UK shoppers are not subject to import duties, but companies sending larger shipments do have to pay import duties.
Before the advent of globalized online markets, the exemptions had limited impact, but today retailers in the United States and the European Union are increasingly under pressure from low-cost Chinese competitors, while national coffers are missing out on potential tax revenue opportunities.
Mr Dunkerton also described Shein as a “complete environmental disaster”.
He told Radio 4’s Today programme: “Personally I would force them to pay import duties, VAT and possibly an environmental tax.”
Shein has previously said it fully complies with all of its UK tax obligations.
The company was founded in China but has relocated to Singapore and has been preparing to sell shares on the stock market, sparking greater scrutiny of its practices.
The BBC understands that the company submitted preliminary paperwork for a London listing earlier this year after the idea of a possible New York listing came under heavy criticism from both Republican and Democratic politicians.
US lawmakers have raised concerns about the company’s “close ties to the People’s Republic of China”. The company has also been accused of using forced labour in parts of its supply chain, which it denies. The company told the BBC it has “zero tolerance for forced labour”.
Shein says its “test and repeat” approach, whereby it makes products in small batches and then reorders them based on customer demand, means less waste compared to traditional retailers.
But it has been criticised for encouraging shoppers to buy disposable garments through low prices and a “gamified” social media strategy.
The U.S. and the European Union are already studying whether to tighten tax rules to include Shein and other direct-to-consumer businesses such as Chinese retailer Temu.
Shein has previously said its success is not due to duty-free sales but to offering customers fashionable products at affordable prices.
A Treasury spokesman said: “Our customs and tax system strikes a balance between reducing the burden on businesses and consumers buying low-value goods from overseas and the interests of UK businesses.”
They added that VAT applies the same rate to all goods, regardless of their origin or value.
Mr Dunkerton founded Superdry over 20 years ago.
The company, whose distinctive Japanese-style T-shirts have been worn by Hollywood actors and sports stars, was valued at £1.8bn at its peak in 2018.
But Superdry’s popularity has waned and it was delisted from the London Stock Exchange in July this year, ending a nearly 15-year listing.
Shares in the company, which is now trading on another exchange, are valued at less than £10m. Mr Dunkerton said he was still working to turn around the company’s fortunes and confirmed he would try again to take it private.
