Notonthehighstreet chief warns online sales tax would hurt small brands and retailers

The CEO of online marketplace Notonthehighstreet has warned any Budget move to impose an online sales tax would be a “mistake” and penalise small firms already battered by the pandemic.

Claire Davenport said the move would come at the worst time for small business owners, with many having shifted online due to the pandemic or set up internet ventures after losing their jobs in the crisis.

The group saw its community of hand-picked small business sellers rise four-fold in 2020 as e-commerce became a lifeline for many firms and entrepreneurs.

Davenport’s comments come amid a widening split in the retail industry over the potential introduction of an online sales tax as reports suggest the Chancellor is looking at how the levy could work in the UK ahead of his 3 March Budget.

Some are calling for the tax to replace the outdated and highly criticised business rates system and help level the playing field with internet retail giants. This has been brought to the fore by the pandemic, which has hammered bricks-and-mortar chains. But others fear it will stifle a burgeoning industry that will help the economy recover from Covid-19.

Speaking to the PA news agency, Ms Davenport said: “My own view is that it’s a mistake. A lot of small businesses have spent the past year trying to get online and set up their businesses – people who didn’t run a business before or have had to pivot because they’ve needed to go online.

“You don’t want to get in the way of people doing that. Penalising small businesses that are trying to follow a trend that’s happening in the market is not right.”

Notonthehighstreet, which was founded in 2006, saw a 50% surge in applications from sellers last year, with a 78% increase in May.

It also added nearly another million new customers in 2020 as online retail boomed with swathes of the high street shut due to Covid-19 restrictions.

Rather than hitting small businesses with online levies, she said the Budget should instead look to offer more support to entrepreneurs and sole traders and help small businesses “get started and scale up”.

Notonthehighstreet has expanded to match the growing demand, taking on another 77 employees last year and almost doubling its product and technology team.

It was bought in early February by US private equity firm Great Hill Partners, which has backed firms including home furnishings retailer Wayfair and digital travel group Momondo.

The retailer wants to further boost the number of sellers and widen ranges across homewares and garden products, as well as food and drink – which saw combined sales double last year.

The group is based in Richmond, south-west London, and has some 3.6 million customers and more than 5,000 sellers on its market.