{"id":2529,"date":"2022-03-06T21:11:24","date_gmt":"2022-03-06T21:11:24","guid":{"rendered":"https:\/\/uk.legalvision.com.au\/?p=2529"},"modified":"2026-02-13T03:56:22","modified_gmt":"2026-02-13T03:56:22","slug":"dropshipping-legal-considerations","status":"publish","type":"post","link":"https:\/\/legalvision.co.uk\/ecommerce-online-business\/dropshipping-legal-considerations\/","title":{"rendered":"What are the Legal Considerations for Setting Up a Dropshipping Business in the UK?"},"content":{"rendered":"\n<p>Dropshipping is a relatively new way of doing business, but it is fast becoming popular. This is because there is a relatively low barrier to entry to dropshipping. Indeed, you only need to set up a website, find a supplier for the goods you want to sell, and start operating. However, there are a few ways to run into problems, meaning that your business may cause you to lose money instead of making it. This article will explain how dropshipping works and the key points you need to consider before setting up your dropshipping store.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">What is Dropshipping?<\/h2>\n\n\n\n<p>Put simply, dropshipping is a retail fulfilment method where you sell goods, but someone else delivers them to your customer. A customer visits your website and purchases an item from you. You then ask your third-party supplier to send that item to your customer, providing them with their delivery details. Your profit is the difference between what the customer pays you and what your supplier charges you to fulfil the order.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Advantages of Dropshipping<\/h2>\n\n\n\n<p>Dropshipping can be an excellent way to start an online store because you can set up the business easily and avoid investing in or storing large amounts of stock. You also do not need to deal with actually shipping your goods. Effectively, you make a website offering your chosen products for sale, but hand off dealing with stock and shipping of orders to your supplier.<\/p>\n\n\n\n\n<a href=\"#content-next\"\n   class=\"block p-4 mt-10 text-xl font-bold text-center text-white no-underline bg-gray-800 rounded-t-xl\">\n    Continue reading this article below the form\n    <i class=\"text-xl fa-regular fa-arrow-down\"><\/i>\n<\/a>\n<div class=\"px-6 pt-10 pb-12 mb-10 text-center bg-gray-100 rounded-b-xl sm:px-12 test\">\n    <div class=\"mb-8 text-2xl font-bold text-orange\">\n        Need legal advice?\n        <br>\n        <span class=\"text-lg not-prose\">\n                            Call <a href=\"tel:+448081968584\" class=\"not-prose\">0808 196 8584<\/a> for urgent assistance.\n                <br>\n                Otherwise, complete this form, and we will contact you within one business day.\n                    <\/span>\n    <\/div>\n\n    \n\n<div class=\"not-prose flex justify-center text-left 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VAT Issues<\/h3>\n\n\n\n<div  class=\"box box--icon box--info\">\n    <p>Depending on where you sell your goods and where your suppliers ship them from, you must consider <a href=\"https:\/\/legalvision.co.uk\/corporations\/what-does-business-need-know-about-vat\/\">value added tax (VAT)<\/a> issues. Since 1 January 2021, online businesses must collect VAT as the seller of goods when the customer makes a purchase. If you are selling goods supplied by a UK supplier to a UK customer, the rules would be the same as for any other UK sale made by ordinary means.<\/p>\n<\/div>\n\n\n\n<p>However, if you plan to sell to customers outside the UK and use suppliers based outside the UK, the tax position can become very complicated for you. In these cases, you should get specific tax and legal advice. For example, if you get a supplier in China to send goods to a UK customer, you need to collect VAT on these goods and register for VAT. If that Chinese supplier sells goods to a customer in France, you would need to collect the appropriate VAT that the customer would usually pay for the goods. You would also need to register for VAT in one EU state so that you can submit an EU tax return via the <a href=\"https:\/\/www.gov.uk\/guidance\/completing-a-one-stop-shop-vat-return\">government\u2019s One Stop Shop VAT return<\/a>.<\/p>\n\n\n\n<p>The actual VAT rate also changes depending on what goods you sell, which adds further complications. In the UK, the standard VAT rate currently applies at 20% to most goods, while the law applies a reduced rate of 5% to some goods and a zero rate to others. Goods taxed at the reduced 5% rate include children\u2019s car seats and home energy, while the law applies the zero rate to most food. As indicated above, those rates change depending on your EU customers\u2019 countries. For example, the standard rate in France is currently 20%, but they have two reduced rates for some goods. The usual rate in Ireland is currently 23%. Again, to avoid uncertainty, you should seek legal help if you plan to sell to overseas customers and use overseas suppliers.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">2. Consumer Protection Rules<\/h3>\n\n\n\n<p>As well as navigating complex VAT rules, you must also abide by laws put in place to <a href=\"https:\/\/legalvision.co.uk\/commercial-contracts\/consumer-rights-act\/\">protect consumers\u2019 rights<\/a>. These consumer protection rules give your customers rights if your supplier sends them goods that are faulty or the product quality is otherwise poor. While you can take up any issues with your supplier, you will be the person responsible for making things good with your customer at the end of the day. Similarly, distance selling regulations give your customers 14 days to decide they do not want their goods after all, and they do not have to provide you with a reason. You will still have to give your customer a refund, and it may cost more for you to send the goods back to the supplier than the goods are worth.<\/p>\n\n\n\n<div  class=\"box box--icon box--warning\">\n    <p>Because of the potential headaches involved with dealing with issues that arise with customer orders, you must be careful in choosing your suppliers, since you will have legal liability if anything goes wrong.<\/p>\n<\/div>\n\n\n\n<h3 class=\"wp-block-heading\">3. Dealing with GDPR<\/h3>\n\n\n\n<p>One final thing you must be aware of is that your online business must be <a href=\"https:\/\/legalvision.co.uk\/data-privacy-it\/how-does-gdpr-affect-my-business\/\">GDPR compliant<\/a>. GDPR stands for the General Data Protection Regulation, implemented in the EU and UK in 2018. As a dropshipping business owner in the UK, the GDPR will apply to you, and it is a legal requirement that your business is fully GDPR compliant. You must tell your customers certain information about your business and how you use their personal data. You should usually contain this information in a Privacy Policy and Cookie Policy.&nbsp;<\/p>\n\n\n\n<p>A company is one of the most commonly used business structures in the UK. It exists as a separate legal entity with its own legal personality, distinct from its shareholders and directors. As a result, the law limits your personal liability to the amount you invest or agree to contribute, usually the value of your shares or any guarantees you give. However, running a company involves more extensive legal and administrative obligations than some other structures. These include duties such as maintaining company registers, filing annual accounts and confirmation statements with Companies House, and complying with directors\u2019 duties and responsibilities under the <em>Companies Act 2006<\/em>.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">4. Key Commercial Considerations<\/h3>\n\n\n\n<p>The commercial relationship between you and your dropshipping supplier is critical to the success of your business. Before you start trading, you should have a clear written agreement in place that sets out how the arrangement will work in practice.<\/p>\n\n\n\n<p>Your contract should specify how and when you place orders, whether automatically through an integrated system or manually, and who will take responsibility if someone misses or processes an order incorrectly. You should also agree on delivery timeframes, acceptable shipping methods, and the type of packaging your team will use, as delays or poor presentation can directly affect customer satisfaction and your reputation.<\/p>\n\n\n\n<div  class=\"box box--icon box--info\">\n    <p>It is particularly important to deal with faulty, damaged, or lost goods. Your agreement should clarify who is responsible for replacements, refunds, and return shipping costs, and specify the timescales within which your team must resolve issues. Since you remain legally responsible to the customer, you should ensure the supplier indemnifies you for losses caused by their failure.<\/p>\n<\/div>\n\n\n\n<p>The key issues of delivery and risk should also be addressed. Any agreement should clearly identify who is responsible for delivery and the cost of delivery, as well as at what point the risk in the goods passes.&nbsp;<\/p>\n\n\n\n<p>Other key terms include pricing, payment terms, stock availability updates, quality control standards, data protection obligations, and termination rights if the supplier\u2019s performance falls below agreed standards. Getting these commercial terms right at the outset can significantly reduce risk and protect your margins as your business grows.<\/p>\n\n\n    <div class=\"my-7 lg:my-10 border-y-2 border-gray-100 py-7 lg:py-10 flex flex-col sm:flex-row items-start gap-10\">\n                    <img decoding=\"async\" class=\"w-52 mx-auto my-0! rounded\" src=\"https:\/\/img.legalvision.com.au\/wp-content\/uploads\/sites\/4\/2022\/07\/29111635\/start-online-business-uk-560x792-1.jpg\" alt=\"Front page of publication\"\n                 loading=\"lazy\" width=\"208\" height=\"298\">\n                <section>\n            <div class=\"text-2xl font-bold\">How to Start an Online Business in the UK<\/div>\n            <div class=\"body-text\">\n                <p>Starting an online business in the UK is complex. This free guide helps you navigate the legal steps with confidence.<\/p>\n            <\/div>\n            \n\n<a href=\"https:\/\/go.legalvision.co.uk\/uk-online-business-guide.html\" class=\" block px-5 py-3.5 max-w-fit bg-orange button__hover transition rounded text-white font-bold text-lg no-underline uppercase leading-tight text-center\" target=\"\" rel=\"\">Download Now<\/a>        <\/section>\n    <\/div>\n\n\n\n\n<h2 class=\"wp-block-heading\">Key Takeaways<\/h2>\n\n\n\n<p>Although many consider dropshipping an ideal way to enter the online selling arena since it requires little in start-up costs, you should be aware of several key points before starting your dropshipping business, notably:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>the need to abide by consumer protection laws;<\/li>\n\n\n\n<li>VAT issues specific to UK dropshippers; and<\/li>\n\n\n\n<li>compliance with GDPR is necessary.<\/li>\n<\/ul>\n\n\n\n<p>LegalVision provides ongoing legal support for online businesses through our fixed-fee legal membership. Our experienced <a href=\"https:\/\/legalvision.co.uk\/ecommerce-lawyers-lp\/\">ecommerce lawyers<\/a> help businesses in the e-commerce industry manage contracts, employment law, disputes, intellectual property and more, with unlimited access to specialist lawyers for a fixed monthly fee. To learn more about LegalVision\u2019s legal membership, call <a href=\"tel:+448081968584\" class=\"AVANSERnumber dynamic-number\">0808 196 8584<\/a> or <a href=\"https:\/\/legalvision.co.uk\/membership\/\">visit our membership page<\/a>.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Frequently Asked Questions<\/h2>\n\n\n\n<div class=\"schema-faq wp-block-yoast-faq-block\"><div class=\"schema-faq-section\" id=\"faq-question-1769573358177\"><strong class=\"schema-faq-question\"><strong>What is the difference between dropshipping and an online marketplace?<\/strong><\/strong> <p class=\"schema-faq-answer\">The dropshipping model is where you sell goods to customers but pass off the actual fulfilment of an order to a supplier. With an online marketplace, you act as the person who introduces the purchaser to the supplier, and the purchaser transacts directly with the supplier, not with you.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1769573366060\"><strong class=\"schema-faq-question\"><strong>Is dropshipping legal in the UK?<\/strong><\/strong> <p class=\"schema-faq-answer\">Dropshipping is entirely legal in the UK; it is treated no differently to any other kind of e-commerce store. That does mean that you must abide by all applicable sales and consumer protection laws and GDPR<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1769573373133\"><strong class=\"schema-faq-question\"><strong>What are the advantages of dropshipping?<\/strong><\/strong> <p class=\"schema-faq-answer\">Dropshipping allows you to start an online store without the need to invest in or store inventory. It also eliminates the need to handle shipping logistics, as your supplier takes care of it.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1769573383613\"><strong class=\"schema-faq-question\"><strong>How does VAT affect dropshipping in the UK?<\/strong><\/strong> <p class=\"schema-faq-answer\">If you sell goods in the UK, you must collect VAT. For international sales, the VAT rules can be complex, and you may need to register for VAT in multiple jurisdictions. It is advisable to seek specific tax and legal advice for international transactions.<\/p> <\/div> <\/div>\n<div class=\"not-prose m-feedback-prompt\">\n    <!-- Thumbs up\/down bar -->\n    <div class=\"m-feedback-prompt__main\">\n        <div class=\"m-feedback-prompt__title\">Was this article helpful?<\/div>\n        <div>\n            <!--span class=\"m-feedback-prompt__button--text\">Thanks!<\/span-->\n            <button type=\"button\" class=\"m-feedback-prompt__button m-feedback-prompt__button--yes\"\n                    data-analytics-link=\"feedback-prompt:yes\" aria-label=\"Agree\">\n                <i class=\"fa-regular fa-thumbs-up fa-3x\"><\/i>\n            <\/button>\n            <button type=\"button\" class=\"m-feedback-prompt__button m-feedback-prompt__button--no\"\n                    data-analytics-link=\"feedback-prompt:no\" aria-label=\"Disagree\">\n                <i class=\"fa-regular fa-thumbs-down fa-3x\"><\/i>\n            <\/button>\n        <\/div>\n    <\/div>\n\n    <!-- Feedback form -->\n    <div class=\"m-feedback-prompt__form\">\n        <div class=\"m-feedback-prompt__form--thanks \">\n            <div>Thanks!<\/div>\n            <p>\n                We appreciate your feedback \u2013 your submission has been successfully received.            <\/p>\n        <\/div>\n        <form id=\"contact-form\" class=\"m-feedback-prompt__form--form\" action=\"\" method=\"post\">\n            <input type=\"hidden\" id=\"authenticity_token\" name=\"authenticity_token\" value=\"9eb4f72322\" \/><input type=\"hidden\" name=\"_wp_http_referer\" value=\"\/api\/wp\/v2\/posts\/2529\" \/>            <input value=\"https:\/\/legalvision.co.uk\/ecommerce-online-business\/dropshipping-legal-considerations\/\" type=\"hidden\" name=\"currenturl\"\n                   id=\"currenturl\">\n            <input value=\"What are the Legal Considerations for Setting Up a Dropshipping Business in the UK?\" type=\"hidden\" name=\"currenttitle\"\n                   id=\"currenttitle\">\n            <label>\n                <!-- display on thumbs-up -->\n                <span class=\"m-feedback-prompt__feedback m-feedback-prompt__feedback--yes\">\n                    Can you tell us <span class=\"font-semibold\">why<\/span> you found it helpful?\n                <\/span>\n\n                <!-- display on thumbs-down -->\n                <span class=\"m-feedback-prompt__feedback m-feedback-prompt__feedback--no text-lg\">\n                    How can we better improve this article?\n                <\/span>\n                <textarea name=\"feedbackmessage\" id=\"feedbackmessage\" required><\/textarea>\n            <\/label>\n\n            <div class=\"m-feedback-prompt__form--error\" id=\"form-submit-error\"><\/div>\n            <button id=\"submit-contact-form-button\" type=\"submit\" name=\"commit\" class=\"m-feedback-prompt__form--submit\"\n                    data-analytics-link=\"feedback-prompt:submit\">\n                Submit            <\/button>\n        <\/form>\n    <\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Dropshipping is a relatively new way of doing business, but it is fast becoming popular. This is because there is a relatively low barrier to entry to dropshipping. Indeed, you only need to set up a website, find a supplier for the goods you want to sell, and start operating. However, there are a few<a href=\"https:\/\/legalvision.co.uk\/ecommerce-online-business\/dropshipping-legal-considerations\/\">Continue reading <span class=\"sr-only\">&#8220;What are the Legal Considerations for Setting Up a Dropshipping Business in the UK?&#8221;<\/span><\/a><\/p>\n","protected":false},"author":13522,"featured_media":183575,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_relevanssi_hide_post":"","_relevanssi_hide_content":"","_relevanssi_pin_for_all":"","_relevanssi_pin_keywords":"","_relevanssi_unpin_keywords":"","_relevanssi_related_keywords":"","_relevanssi_related_include_ids":"","_relevanssi_related_exclude_ids":"","_relevanssi_related_no_append":"","_relevanssi_related_not_related":"","_relevanssi_related_posts":"1893,2329,2159,1403,1843,1065","_relevanssi_noindex_reason":"","editor_notices":[],"footnotes":""},"categories":[34],"tags":[54,365,379,460,639,640],"class_list":["post-2529","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-ecommerce-online-business","tag-online-business","tag-gdpr","tag-ecommerce","tag-vat","tag-dropshipping","tag-consumer-protection"],"acf":[],"yoast_head":"<!-- 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With an online marketplace, you act as the person who introduces the purchaser to the supplier, and the purchaser transacts directly with the supplier, not with you.","inLanguage":"en-GB"},"inLanguage":"en-GB"},{"@type":"Question","@id":"https:\/\/legalvision.co.uk\/ecommerce-online-business\/dropshipping-legal-considerations\/#faq-question-1769573366060","name":"Is dropshipping legal in the UK?","acceptedAnswer":{"@type":"Answer","text":"Dropshipping is entirely legal in the UK; it is treated no differently to any other kind of e-commerce store. That does mean that you must abide by all applicable sales and consumer protection laws and GDPR","inLanguage":"en-GB"},"inLanguage":"en-GB"},{"@type":"Question","@id":"https:\/\/legalvision.co.uk\/ecommerce-online-business\/dropshipping-legal-considerations\/#faq-question-1769573373133","name":"What are the advantages of dropshipping?","acceptedAnswer":{"@type":"Answer","text":"Dropshipping allows you to start an online store without the need to invest in or store inventory. It also eliminates the need to handle shipping logistics, as your supplier takes care of it.","inLanguage":"en-GB"},"inLanguage":"en-GB"},{"@type":"Question","@id":"https:\/\/legalvision.co.uk\/ecommerce-online-business\/dropshipping-legal-considerations\/#faq-question-1769573383613","name":"How does VAT affect dropshipping in the UK?","acceptedAnswer":{"@type":"Answer","text":"If you sell goods in the UK, you must collect VAT. For international sales, the VAT rules can be complex, and you may need to register for VAT in multiple jurisdictions. It is advisable to seek specific tax and legal advice for international transactions.","inLanguage":"en-GB"},"inLanguage":"en-GB"}]}},"_links":{"self":[{"href":"https:\/\/legalvision.co.uk\/api\/wp\/v2\/posts\/2529","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/legalvision.co.uk\/api\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/legalvision.co.uk\/api\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/legalvision.co.uk\/api\/wp\/v2\/users\/13522"}],"replies":[{"embeddable":true,"href":"https:\/\/legalvision.co.uk\/api\/wp\/v2\/comments?post=2529"}],"version-history":[{"count":12,"href":"https:\/\/legalvision.co.uk\/api\/wp\/v2\/posts\/2529\/revisions"}],"predecessor-version":[{"id":195965,"href":"https:\/\/legalvision.co.uk\/api\/wp\/v2\/posts\/2529\/revisions\/195965"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/legalvision.co.uk\/api\/wp\/v2\/media\/183575"}],"wp:attachment":[{"href":"https:\/\/legalvision.co.uk\/api\/wp\/v2\/media?parent=2529"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/legalvision.co.uk\/api\/wp\/v2\/categories?post=2529"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/legalvision.co.uk\/api\/wp\/v2\/tags?post=2529"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}