I've been asked a few times from people who would like to set up a stall selling region 3 DVDs and such in their town. Here are the facts:-
The reason it is ILLEGAL:- All DVD's sold in the UK must be classified by the British Board of Film Classification (BBFC), so it's not the actual region coding that is the problem it's the fact the foreign discs do not have a BBFC certificate
However it is not illegal to buy a DVD of any region outside of the UK and bring it into the country for personal use, so long as it is not re-sold new. This includes buying a DVD online where the transaction takes place outside of the UK.