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19 May 2022

Our research found agreement that a minimum OST threshold could help to rebalance the burden of tax across the industry, generate revenue to reduce business rates for smaller businesses,...

19 May 2022

As part of their support for Local Bike Shop Day, Cyclescheme ran a competition for the local bike shop with the most social media noise, with the chance to win a £150 Restaurant Choice...

19 May 2022

In a ceremony held in Leipzig, Germany, the largest gathering of transport ministers in the world will see current president, Morocco, hand over the reins to UK Transport Secretary Grant...

19 May 2022

The Low Pay Commission has now published its review of the National Living Wage from 2015-2020.

16 May 2022

Millions of people across the country will benefit from cleaner air and cheaper ways to travel and keep active, thanks to £200 million of government funding for new walking and cycling...

12 May 2022

Local Bike Shop Day 2022 was a great success across the UK, with online platforms thriving as well as a surge in the physical footfall seen in-stores!

12 May 2022

We Can, You Can is a celebration of the many faces of cycling. The way we move is changing. And the people leading the change are like me and you. We can, you can.

10 May 2022

The speech sets out the government’s agenda for the upcoming Parliament, outlining proposed policies and legislation. An overview of the main announcements relevant to independent shops is...

28 Apr 2022

To celebrate Local Bike Shop Day on Saturday 30 April, BetterPoints are offering QUINTUPLE points and the chance to win a £55 bike service by choosing to travel on two...

26 Apr 2022

Wheels for Wellbeing is a Disabled people’s cycling organisation who campaign for equal access to cycling...

IRC presents position on the introduction of an Online Sales Tax (OST)

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The Independent Retailers Confederation (IRC), the collection of trade organisations behind Indie Retail, is taking a neutral position on the introduction of an Online Sales Tax (OST) but we want to highlight the varied views of our membership about the design and scope of the new tax. Almost all of our trade association members will be responding to the Treasury consultation.

The IRC has completed polling of retail businesses from across the IRC membership and provided an overview below. We hope this will help the Treasury understand the varied views of independent retailers that trade on high streets and online.

The key conclusions from this research are as follows:

  • There is no consensus view from across independent retailers about the introduction of an online sales tax
  • The majority of our bricks and mortar retailers welcome the idea of OST offsetting business rates costs, which significantly impact their physical premises, but not at the cost of stifling their future online sales
  • If an online sales tax was to be introduced a sufficiently high qualifying threshold needs to be applied, starting at £2million of online sales
  • Click and Collect services must be exempt from the online sales tax because of the important role they play in driving footfall to shops and town centres

 

Support for Online Sales Tax

In our research, there is disparity amongst various retail sectors with regard to support for an Online Sales Tax. The issues envisaged of OST is it would hinder investment and stifle innovation as many small retail businesses have yet to establish a foothold in the world of online commerce, and those who have already started to make that journey, innovating and investing heavily in their digital capabilities to support their high street presence, are already paying corporation tax, business rates that are higher for businesses located in town centres & high streets, and increasing rents; therefore OST is seen by many as simply another layer of tax and administration they will have to face at a time when business running costs are on a steep climb. Others see the outcome of OST being an additional cost that is ultimately passed onto the consumer, making it more difficult to compete with large retail chains and behemoth online platforms. Small retailers who already sell via third-party platforms are paying increased advertising costs and taxes through those channels, and OST adds the risk of further complicating the tax syste.

Where the majority of retail businesses are closer to alignment is that business rates are in dire need of fundamental reform, and that if OST income was repurposed to offset business rates for small businesses operating from bricks and mortar stores, they could welcome OST.

 

Minimum Threshold

Over the next 3 to 5 years, over 75% of retail businesses expect to be selling online and volume of sales to UK customers is expected to exceed 25%, in some cases, online sales account for a much higher proportion of their sales. If an online sales tax is to be introduced, it is crucial it does not restrict small retail businesses’ ability to establish themselves online and to meet consumer demand for convenience and choice. It’s therefore imperative that an online sales threshold of at least £2m is included, to pave the way for newly established and growing retail businesses, but to ensure that larger retailers and online-only platforms remain in scope of OST, many of the latter who don’t contribute fairly to the UK’s tax already.

 

Click & Collect

Over 40% of independent retailers operate some form of click and collect service, and whilst we appreciate the difficulty in establishing the controls to clearly identify click and collect sales income at point-of-sale, click and collect is a valuable contributor to attracting muchneeded footfall into our towns and communities, as such should be exempt of OST. Click and collect supports sustainability and high street health as the consumers journey down to the shop to pick up an order, increasing the likelihood of turning a collection into a wider shopping visit.

 

Goods, Services & Channels in Scope of OST

Over 60% of retailers believe B2C services connected to the sale of goods (e.g. delivery costs, insurances/warranties) and B2C services unconnected to the sale of goods (e.g. holidays and flights) should also be exempt. The vast majority feel that sales transacted through third-party sales & delivery platforms should be subject to OST.

 

Is OST a Good Idea?

Our research found agreement that a minimum OST threshold could help to rebalance the burden of tax across the industry, generate revenue to reduce business rates for smaller businesses, modernise tax treatment of retail activity, improve the economics of store-based retail and support the attractiveness of our high streets and town centres. It is important however that OST doesn’t hinder retailers’ investment and innovation, nor become too difficult to implement.

For further information about the IRC click here.

 

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If you have any other queries please contact us.