
UK suppliers and retailers are raising concerns over Temu’s business practices, as evidence mounts that rogue traders on the Chinese e-commerce platform are exploiting tax loopholes to gain an unfair advantage. A recent investigation has uncovered fraudulent sellers misappropriating UK business details to dodge VAT, allowing them to undercut legitimate domestic suppliers.
According to The Times, an investigation identified multiple instances where Temu sellers falsely claimed UK business addresses and VAT registrations to shift the tax burden onto unsuspecting companies. Among the victims was Physiological Measurements, a legitimate UK business that had its details fraudulently used by a Temu seller named Ikjhfkg’ Shop. Similar cases have been reported across the country, including funeral directors and roofing companies whose information was misused without their knowledge.
This practice allows overseas sellers to avoid the 20% VAT that would normally be collected by Temu and paid to HMRC. Instead, the responsibility is shifted onto fraudulent sellers who, in reality, may never pay the tax. This loophole not only harms UK businesses but also results in significant lost tax revenue.
Temu, owned by Chinese e-commerce giant PDD Holdings, has grown at an unprecedented rate, offering cut-price goods directly from Chinese factories while leveraging aggressive marketing campaigns. However, UK suppliers argue that the platform creates an uneven playing field. While domestic retailers must comply with VAT collection, product safety regulations, and increasing national insurance costs, many overseas Temu sellers sidestep these obligations.
Industry leaders are calling for urgent government action to close the loophole and hold online marketplaces accountable. “We’re competing against sellers who evade tax and ignore UK product compliance standards,” said Nick Glynne, CEO of Buy It Direct. “The system is failing legitimate businesses.”
The UK government has been urged to strengthen due diligence requirements for online marketplaces and enforce stricter VAT compliance checks. Some industry experts believe that requiring platforms like Temu to verify and authenticate UK business registrations before listing sellers could help mitigate fraud.
Temu has suspended several fraudulent sellers following these revelations but insists that it has verification systems in place. “Temu does not tolerate fraud in any form. We continuously refine our measures to maintain a fair and trusted marketplace,” the company said in a statement.
With millions of UK consumers shopping on Temu, the pressure is mounting for regulators to take swift action. UK suppliers and trade associations continue to advocate for fair competition and stronger enforcement to protect domestic businesses from unfair practices.
BHETA is campaigning on this issue on behalf of its members and urges UK suppliers to write to their MP.