UK retailers are missing out on lucrative EU sales opportunities because of concerns about the cost and complexity of handling returns, according to Europe’s largest customs broker.
Customs Support Group (CSG), which operates across 14 European countries, says many businesses are ruling out expansion into international markets over fears they will face double duty payments when goods are returned or remain unsold. This reluctance is contributing to a sharp decline in exports to the EU since Brexit.
Data from Retail Economics and Tradebyte shows that UK footwear and clothing exports to the EU have fallen dramatically – from £7.4 billion in 2019 to £2.7 billion in 2023, a drop of more than 60%.
Nicola Haynes, senior customs consultant at CSG, explained: “Every time goods cross a border, the authority will ask for tax to be paid on those goods, even if they are being returned. When goods are returned to the UK, they are treated as a new import unless you can prove they are previously exported UK goods.”
Managing the process
Haynes says this lack of knowledge and resource around customs returns processes is driving retailers to avoid EU trade altogether. Yet there is, according to CSG, a relatively simple workaround. CSG recommends three key steps to manage returns without incurring additional tax:
- Individual product tracking to link returns to original exports
- Automating returns through customs software
- Using Returned Goods Relief (RGR) to re-import goods without extra duties, provided documentation requirements are met.
“Retailers need to have a way to identify the original export to demonstrate that the same goods have been returned and therefore should not be taxed,” Haynes added. “RGR enables goods to be re-imported into the UK without incurring additional customs duties or taxes.”
With returns a major factor in fashion and footwear, robust tracking and visibility are essential. Most retailers already track refunds for financial purposes, but extending this to align with customs records can remove risk and streamline the process.
Haynes concluded: “This creates a smoother and more manageable process for retailers, while ensuring a robust trail for HMRC.”
Returns 2025 Report
This latest insight from CGS aligns with findings in InternetRetailing’s Returns 2025 Report, which highlight how returns management is now a critical factor in profitability and international growth. For retailers, mastering returns is about far more than just the customer experience – it’s about unlocking new markets without unnecessary cost.
Stay informed
Our editor carefully curates two newsletters a week filled with up-to-date news, analysis and research. Click here to subscribe to the FREE newsletter sent straight to your inbox. Why not follow us on LinkedIn to receive the latest updates on our research and analysis?
