VAT, EPR and customs: compliance rules sellers can’t afford to miss

In the current global trade environment, and as the UK and EU marketplace world continues to grow, compliance is a priority, not an option.

Whether you’re listing your first products or managing a multi‑market operation, VAT, Extended Producer Responsibility (EPR), and customs obligations apply equally. The rules have become more complex, and enforcement is tougher than ever. 

We’ve talked previously about how – and why – the compliance environment is so challenging for sellers. Here we’ll look at it from the sellers’ point of view – why compliance is essential and how you can stay on top of it to grow your business.

The new compliance reality 

Previously, sellers focused mainly on VAT registration and filings. Now, the scope has widened: 

• Environmental obligations like EPR reporting 

• Stricter customs checks and pre‑arrival data rules 

• Tighter monitoring by tax and regulatory authorities 

For many sellers, VAT, EPR and customs compliance still feels like something to “sort out later” – but regulators now target businesses of all sizes, using data‑matching and digital reporting to flag gaps instantly. 

Six myths holding sellers back 

We’ve seen and helped clients rectify some common mistakes and pitfalls, such as:

1. “I’m too small to be noticed.” Even micro‑sellers are flagged through data‑matching for VAT, EPR and customs compliance checks. 

2. “It’s too complicated; I’ll deal with it later.” Delaying action increases the risk of costly penalties and shipment delays. 

3. “Sales come first, compliance can wait.” Non‑compliance can halt growth overnight through holds, fines or reputational damage. 

4. “Doesn’t the marketplace handle everything?” Platforms like Amazon may collect some VAT, but you remain responsible for OSS/IOSS, EPR, and customs. 

5. “I’ll fix problems if they arise.” Penalties often arrive months later, and are far more expensive to resolve after the fact. 

6. “I don’t need automated payments.” Automation protects you by avoiding missed deadlines, ensuring on‑time VAT, EPR and customs payments. 

Reality: Compliance isn’t a burden – it’s a growth enabler. Embed it early and stay audit‑ready. 

🧮 VAT: sharper penalties, stricter monitoring 

UK: new points‑based penalty regime 

Since January 2023, HMRC has applied a points‑based system for late VAT submissions and payments: 

• Initial penalties: 2%–3% 

• From April 2025: rising to 10% for persistent non‑compliance 

• In 2024 alone, HMRC issued £153m in VAT‑error penalties — up 38% year‑on‑year 

Small businesses make up 60% of the UK’s tax gap, proving no seller is too small for scrutiny. 

EU: OSS reporting and cross‑border risks 

The OSS (One‑Stop Shop) scheme simplifies reporting but accurate record‑keeping, correct rates and timely filings remain essential. It’s really common for sellers to find themselves non-compliant without expert support that has deep knowledge of the OSS rules, but getting it wrong can trigger multi‑state fines, and cost more to rectify.
Countries like France and Germany are expanding digital reporting mandates to identify under‑reported VAT faster. 

US: sales tax nexus rules 

After Wayfair v. South Dakota (2018), sellers may need to collect and remit sales tax in any state where they meet economic thresholds – often $100k or 200 transactions. Penalties can include interest, fines, and even licence revocation. 

♻️ EPR: environmental compliance takes centre stage 

EPR requires sellers to register, report packaging data, and contribute financially to waste management schemes. 

UK: setting its own rules

Both “small” and “large” producers must now comply. In 2024, the Environment Agency conducted: 

• 176 producer audits 

• 254 site inspections 

We delve further into the UK’s evolving rules and your strategies for compliance – read more in our guide to EPR in the UK.

EU: continuing to grow

Covers packaging, batteries, WEEE, and textiles, with different registration and reporting systems in each member state. 
Upcoming changes under the Circular Economy Action Plan introduce: 

• Higher recycling targets 

• Eco‑modulated fees penalising less sustainable packaging 

• Mandatory Digital Product Passports (DPPs) from 2026  – learn more about what these are and how to implement them

Meanwhile, Amazon has streamlined its EPR Pay on Behalf policy for the UK, Spain and France.

US: embracing EPR

EPR is emerging state‑by‑state, starting with Maine, Oregon, Colorado and California. Rules vary but typically require: 

• Producer registration 

• Packaging data reporting 

• Payments into recycling schemes 

📦Customs compliance: zero room for error 

UK: stronger enforcement

Post‑Brexit, HMRC collected £41.8bn in customs compliance yield in 2023–24 and is hiring 5,500 officers. Penalties reach £2,500 per error, and goods can be seized for misdeclared shipments. 

EU: continuing to modernise

The Union Customs Code enforces detailed declaration rules. Incorrect data can lead to audits, fines and seizure. The upcoming Customs Data Hub will increase risk profiling and cross‑border checks. 

US: no room for mistakes

Customs and Border Protection (CBP) penalties under 19 U.S.C. § 1592 can equal the full domestic value of goods, alongside seizure. Audits under the Importer Self‑Assessment programme are increasing. 

Learn more about AVASK’s customs clearance and shipping services, which can help you stay compliant and trading smoothly. If you ship via Amazon’s C2S2 programmes, see the list of restricted items.

How VAT, EPR and customs compliance drives growth 

With enhanced audit teams and automated risk profiling, non‑compliance is detected faster than ever. Across the UK, EU and US, regulators target: 

• Missing registrations 

• Irregular filings 

• Data inconsistencies 

• Reporting gaps 

Staying ahead means fewer disruptions and a stronger reputation. 

✅Compliance in 2025 and beyond: 4 factors to watch 

1. Digital Product Passports (DPPs): EU rollout starts 2026
2. EPR expansion: more categories, higher data demands 
3. Stricter customs checks: mandatory pre‑arrival data 
4. Mandatory e‑invoicing: EU‑wide real‑time VAT reporting by 2028 

Begin centralising product, packaging, and compliance data now to absorb regulatory changes with cost-efficiency minimum disruption and cost-efficiency.

How can AVASK support you with compliance? 

AVASK delivers full‑service VAT, EPR and customs compliance for the UK, EU and US. Our services include: 

• VAT and OSS: registrations, filings, reconciliations and audit‑ready records 

• Environmental compliance, including EPR: packaging, batteries, WEEE and textiles registration, reporting and fee management 

• Customs: accurate declarations, commodity classification and pre‑audit checks 

By integrating these, we remove duplication, reduce admin, and keep you compliant in every market.