My big idea: Duty Refunds

Daniil Tarakanov makes it easy to claim back cross-border VAT. His company Duty Refunds is booming post-Brexit
BizAge Interview Team
Daniil Tarakanov

Hi Daniil! What's your elevator pitch?

When UK shoppers buy goods internationally, they are required to pay the import VAT and duties on purchases above £135. Since Brexit, UK shoppers now have to pay customs charges on items imported from the EU as well. However, many aren’t aware they can reclaim this cost back if they return an item and end up not claiming money that is rightfully theirs. That's where Duty Refunds can help.

Duty Refunds is the first and only online import charge refund platform for UK shoppers, helping customers exercise their consumer rights when seeking a refund on goods purchased from overseas sellers.

Why does the market need it?

Previously, consumers looking for custom refunds would have to apply through HMRC with lengthy forms. We have simplified the otherwise complicated and time-consuming process of refunding any import charges on returned goods so that UK consumers can shop internationally with more confidence.

Through our digital solution, customers fill in our online form which takes less than five minutes and we take care of the rest. A dedicated account handler is available to customers throughout the claim process. We only charge a single payment of 15% from the customer’s customs refund money after claims are successfully paid by HMRC on a no win, no fee basis.

How did Duty Refunds come about?

I had the idea for Duty Refunds when my partner wanted to return a pair of shoes ordered from France. Shipping them back to France and claiming the refund through HMRC looked so complicated that she gave up in the end and kept the shoes. This seemed so unfair to me so I embarked on a painstaking weeks-long mission to reclaim the duties from HMRC.

I realised this must be happening all the time. Thousands of people were keeping items they’d bought internationally – not because they liked them, but because they were difficult to return due to complicated HMRC forms and endless customs documents to retrieve. Because of that hassle, many don’t even bother claiming back the refund.

So I started Duty Refunds with a mission – to make it easier and faster for online shoppers to get their hard-earned money back. As the first step on this journey, we have automated and digitised the import duty refund process - helping UK shoppers to easily refund their import charges for international returns. This helps UK shoppers feel more confident purchasing on international websites and initiate any returns more conveniently. Users fill out a simple form and we handle the rest, with the HMRC refund landing with the customer in about four weeks.

How successful has the idea been with UK Consumers?

To date, we have helped customers refund their purchases amounting to half a million pounds and are rated 4.8 excellent on Trustpilot. We also work extremely closely and are integrated with courier companies (eg: DHL, DPD, UPS, Fedex and Parcelforce) and HMRC.

When you consider that UK customers bought approximately £55bn worth of items from abroad last year and returned about 22% of those purchases - that’s about £1.66 billion in taxes that could have been claimed back by shoppers.

How do you market the company?

When we started marketing the company, we invested considerably in pay per click. This helped us to grow initially with consumers who have already tried getting refunds with HMRC, but it didn’t target consumers who were unaware they could claim this cost back. As a result, more recently we have started exploring working with influencers, writing blogs and using public relations to bring more awareness to both our solution and educating around consumer rights when buying and returning products to overseas sellers. Now we are not only just marketing our services but helping to create greater demand for it too through education. Community-based marketing is also gaining momentum right now as it helps create connections and foster greater loyalty through curating communities who share similar interests. That’s why we're also planning to build a community for people in the UK who love international shopping.

I’d also recommend startups look at mutually beneficial partnerships that can help grow their business. In addition to the customer being a core target audience, we also target retailers to support their customers via a B2B2C model. This creates a benefit for retailers and offers another way for us to reach UK shoppers so they can reclaim their duty and tax refund more easily and raise awareness of Duty Refunds.

How is Duty Refunds planning to grow further?

We believe country borders shouldn’t stop anyone from buying something they want or need. If you can return your high street store package with zero fuss, you should also be able to return a pair of shoes to Italy with the same ease. The first step in making international online shopping feel local is to help our customers get back their customs and import fees back from HMRC if they’ve returned an item to a retailer abroad, saving them time and a whole lot of stress in the process.

But customs returns are only the beginning. We’re currently building a product that handles the end-to-end UK customs process for our retailer partners. Everything from delivery to returns. For customers, this means buying from worldwide retailers would be no different than buying something from a UK-based retailer - all the customs processes would happen behind the scenes. This benefits those retailers looking to offer UK based customers that extra reassurance to buy with them - knowing that if they need to make a return, they won’t have to go through a long-winded process to get their customs duty back.

As we grow, we plan to add other services such as customs duty management that allows customers to only pay customs duties on items they decide to keep. Just this month (March), we launched our solution for an integrated Delivered Duty Paid (DDP) channel so that customs duties and taxes are included in the item price and customers never have to pay more than what they see on a website when shopping. We are now onboarding the first batch of European and American DTC brands at the moment - exciting times ahead!

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BizAge Interview Team