My Business Can't Survive This Mess - BREXIT

[Confused!!]

I assume I'm not the only person in this position, I have a small online business selling goods primarily to EU customers. It was a big relief to me initially when a 'Free Trade Deal' was done at the last minute with the EU. (I'm still baffled as to why an extension wasn't put in place while the world deals with the pandemic).

Fast forward to the reality & despite preparing for the new customs & shipping requirements for sending our products to the EU (obtaining custom codes, EROI number etc) our customers are not receiving their orders without paying additional duty charges in their countries. Our goods are supposed to be free of duty!

An average order value for us is approx. £48, our customers are being asked to pay as much as 26 euros to receive their orders!

Customers are already waiting weeks before they find this information out & they are not accepting their orders, understandably.

The upshot of all this is, we are having to refund customers, we are losing products & losing customers fast!

Our business has survived decades, provided for a family of six during this time & we've always managed to maintain a profitable business. This appears to be over now & directly as a result of a shambolic exit from the EU.

What are families like ours suppose to do now? Our income is dwindling fast & it will soon no longer be viable to continue!

Thanks Boris, trust your family & friends are prospering through this!

 

[Chris Ashdown]

I can understand and sympathise if you moan about the courier service, but the vat and import costs should have been known to you far earlier and sorted out.

Do you not have UK sales you can increase

 

[MBE2017]

The other potential alternative might be to set up a distribution company in the EU, warehouse the goods and despatch from there.

 

[japancool]

ur customers are not receiving their orders without paying additional duty charges in their countries. Our goods are supposed to be free of duty!

Yes, they are. They're not being charged duty. They're being charged VAT and courier charges.

Frankly, it's your own fault if you didn't understand what a free trade deal meant.

Try expanding your horizons and looking beyond the EU.

 

[Mr D]

Well as Brexit has already happened you need to look at solutions in the EU. You've had almost 5 years to figure out what to do - get it done.

Oh and who told you the goods would be free of duty?

 

[NickGrogan]

directly as a result of a shambolic exit from the EU.

The exit from the EU went fairly well; It could have been a lot worse.

You've had 5 years to get ready, what preparations did you make during that time?

 

[japancool]

Remember how, when before Brexit, you used to send stuff to Norway or Switzerland, you didn't charge UK VAT and had to prepare paperwork, and then when your Norwegian or Swiss customers received their goods, they had to pay import customs charges?

Well, that's exactly what's happening now to the whole of the EU. It's not hard to understand.

 

[Interestedobserver]

What do you sell?

 

[Paul Norman]

You are certainly not alone. The deal, of course, was struck on literally the last day, meaning that you did not have 4 years to prepare.

However, as you will have read above, British people don't actually have any empathy with you, and are not going to give constructive advice.

A number of my suppliers have broadly come across the same thing in reverse.

I empathise with you.

But this is not the forum for constructive advice. Here we must sing Rule Britannia and mock your lack of preparedness. No help.

However, you will find help elsewhere. It very much is possible to continue your business, albeit with some transportation delays. This forum, though, is not the place.

 

[Paul Norman]

We are planning to resume sending deliveries to EU customers shortly. But we are devising a different approach, including making them aware that VAT will be collected at 'their end'.

 

[Paul Norman]

In addition, we are moving the main distribution to an EU location, That will essentially remove any issues for us.

 

[Mr D]

You are certainly not alone. The deal, of course, was struck on literally the last day, meaning that you did not have 4 years to prepare.

However, as you will have read above, British people don't actually have any empathy with you, and are not going to give constructive advice.

A number of my suppliers have broadly come across the same thing in reverse.

I empathise with you.

But this is not the forum for constructive advice. Here we must sing Rule Britannia and mock your lack of preparedness. No help.

However, you will find help elsewhere. It very much is possible to continue your business, albeit with some transportation delays. This forum, though, is not the place.

A WTO deal was one of the options prior to the vote. It was the one best known to businesses for the entire 4 years as an option - admittedly a worst option.
May well have been some businesses that were convinced a deal that exactly matched what we had in 2015 would be struck, however even they should have been planning for what happens if its not.

The deal we ended up with has some similarities to WTO deal.

If it came as a shock - is that down to government for poor communications or down to businesses that did not want to consider any change could happen?

 

[Paul Norman]

A WTO deal was one of the options prior to the vote. It was the one best known to businesses for the entire 4 years as an option - admittedly a worst option.
May well have been some businesses that were convinced a deal that exactly matched what we had in 2015 would be struck, however even they should have been planning for what happens if its not.

The deal we ended up with has some similarities to WTO deal.

If it came as a shock - is that down to government for poor communications or down to businesses that did not want to consider any change could happen?

My comment arose from the fact that on this forum, instead of empathising and offering advice, the question is receiving mainly 'you should already know the answer'.

Which kind of makes this forum of zero value on this issue.

A LOT of businesses are struggling. The change of relationship with the EU is a big one.

I would suggest that the OP might benefit from attending a seminar, such as this one. Other seminars are obviously available.

https://www.sendcloud.co.uk/shippin...gq6R8oUut1lv9DZirbNGAAjePywcGqjwJ44ovf5oH3Tdk

 

[gpietersz]

You are certainly not alone. The deal, of course, was struck on literally the last day, meaning that you did not have 4 years to prepare.

We have known since 2016 that it was a possibility we would leave the customs union.

We have known from mid 2019 that it was probable.

But this is not the forum for constructive advice

It is not. Posting here is unfortunately for the think skinned.

The OP did not ask for advice: he did not ask anything unless you did not count rhetorical questions. He was complaining. He does not even give us much information: what he is selling, whether his customers are consumers or (VAT registered) businesses (so who paid VAT and when previously), what courier he is using etc.

 

[Mr D]

My comment arose from the fact that on this forum, instead of empathising and offering advice, the question is receiving mainly 'you should already know the answer'.

Which kind of makes this forum of zero value on this issue.

A LOT of businesses are struggling. The change of relationship with the EU is a big one.

I would suggest that the OP might benefit from attending a seminar, such as this one. Other seminars are obviously available.

https://www.sendcloud.co.uk/shippin...gq6R8oUut1lv9DZirbNGAAjePywcGqjwJ44ovf5oH3Tdk

You mean besides the helpful ideas like basing out of EU to deal with EU? Or looking beyond the EU for customers?

 

[Darren_Ssc]

The OP did not ask for advice: he did not ask anything unless you did not count rhetorical questions.

One of the many one-post wonders who, somehow, manage to get a lot of responses and are never seen again.

A cynic might connect the frequency of such posts with the apparent lack of real content elsewhere?

 

[japancool]

If you want sympathy, there are charities and social workers for that.

Regardless of a deal or not, all these issues with VAT would have still been there. The rules for sending goods into the EU have been there for ages - in fact, if you have ever imported ANYTHING from a non-EU country, you would have been on the other end of those rules. So you cannot say that business could not have prepared.

If you had let your customers know that they would be charged VAT on import, and that your prices now exclude VAT (and are therefore 16.66% cheaper) for non-UK customers, you could have built up expectations ahead of time. If you didn't, there's only one person to blame for that.

B2C is not that hard to understand. You don't charge VAT to your non-UK customers and it's collected when they receive the goods., plus a standard courier handling charge As a certain advertising slogan would say, simples!

 

[Jeff FV]

I will be honest - I don’t understand all the intricacies and details of trading with the EU, and I am glad I don’t have to. (Closed our business a few years ago)


But I have question, no hidden agenda, just genuinely trying to understand and increase my knowledge.

in this post, and other similar posts, the suggestion is often made to set up a distribution centre in the EU. I can see how this would be beneficial for the individual business, but how is this beneficial for U.K. plc? It seems to me this means moving jobs etc. from U.K. to the EU, which can’t be a good thing for the U.K.? So the opposite of a Brexit benefit?

As I say, my knowledge is limited, and I would be delighted if someone could explain how moving all this stock from U.K. to EU benefits us collectively.

 

[japancool]

in this post, and other similar posts, the suggestion is often made to set up a distribution centre in the EU. I can see how this would be beneficial for the individual business, but how is this beneficial for U.K. plc? It seems to me this means moving jobs etc. from U.K. to the EU, which can’t be a good thing for the U.K.? So the opposite of a Brexit benefit?

If you're a manufacturer, it's still of benefit to the UK, as the goods are still being made here, and the profits are accrued here.

If the legal entity is in the UK, the second part still applies, that is the say, the profits are being accrued here.

All of this really goes away when the One Stop Shop comes in.

But what is not being made clear is that sellers into the EU are not at as much of a disadvantage as is being made out. Your prices didn't just suddenly get 20% more expensive, because you're no longer charging UK VAT, therefore your prices just came down for EU customers (and then go back up when they pay import VAT). Where they are being stung is the handling charge that the parcel delivery companies charge.

But loads of overseas sellers still sell successfully into the UK and the EU despite all of that.

 

[Paul Norman]

I will be honest - I don’t understand all the intricacies and details of trading with the EU, and I am glad I don’t have to. (Closed our business a few years ago)


But I have question, no hidden agenda, just genuinely trying to understand and increase my knowledge.

in this post, and other similar posts, the suggestion is often made to set up a distribution centre in the EU. I can see how this would be beneficial for the individual business, but how is this beneficial for U.K. plc? It seems to me this means moving jobs etc. from U.K. to the EU, which can’t be a good thing for the U.K.? So the opposite of a Brexit benefit?

As I say, my knowledge is limited, and I would be delighted if someone could explain how moving all this stock from U.K. to EU benefits us collectively.

It does depend on the business, of course. My business used to receive items from various locations. None of them were made in the UK. My customers were also in various locations - a very significant number in the EU.

If I distribute from the EU, you are correct. Some jobs will have moved from the UK to the EU. I will also set up a company in the EU, which will pay taxes in the EU.

If I were to then import goods from the UK, that, of course, would put some money back into the UK. That is not very likely in my industry.

Because of the above, I will also move my other business to the EU, and myself. All of which is just logistical common sense, and overall, Brexit will have caused me no more than a momentary inconvenience.

 

[Mr D]

I will be honest - I don’t understand all the intricacies and details of trading with the EU, and I am glad I don’t have to. (Closed our business a few years ago)


But I have question, no hidden agenda, just genuinely trying to understand and increase my knowledge.

in this post, and other similar posts, the suggestion is often made to set up a distribution centre in the EU. I can see how this would be beneficial for the individual business, but how is this beneficial for U.K. plc? It seems to me this means moving jobs etc. from U.K. to the EU, which can’t be a good thing for the U.K.? So the opposite of a Brexit benefit?

As I say, my knowledge is limited, and I would be delighted if someone could explain how moving all this stock from U.K. to EU benefits us collectively.

UK does not benefit.

However how many of us think of the UK when looking at how to sell, where to sell, what to sell?
I know its not a factor in my calculations.

In terms of customers - they can get the products without paying extra, without customs delays and returns are relatively simple.
In terms of the business - the jobs will be where the work is. If needs a distribution centre themselves then that is what is done. Local jobs in the local area for EU sales rather than UK jobs.
Though jobs are a cost of business - we should not be looking to create or keep jobs simply for the benefit to the country, only benefit of the company or long term plans.
May be a side effect that jobs are created or kept by business decisions. But unless someone else is paying for them (a la furlough scheme) then no reason a job is paid for simply to benefit the country.

UK business selling to French customers from a French warehouse..... the profits end up where? UK business? And who gets to tax the UK company? The French? Or the British?

What would not benefit the country at all (bearing in mind what I said about it not being a factor in decision making) - is to simply move the business entirely to the EU.
If that is where the customers are then it makes sense.

 

[Deleted member 335660]

I assume I'm not the only person in this position, I have a small online business selling goods primarily to EU customers. It was a big relief to me initially when a 'Free Trade Deal' was done at the last minute with the EU. (I'm still baffled as to why an extension wasn't put in place while the world deals with the pandemic).

Fast forward to the reality & despite preparing for the new customs & shipping requirements for sending our products to the EU (obtaining custom codes, EROI number etc) our customers are not receiving their orders without paying additional duty charges in their countries. Our goods are supposed to be free of duty!

An average order value for us is approx. £48, our customers are being asked to pay as much as 26 euros to receive their orders!

Customers are already waiting weeks before they find this information out & they are not accepting their orders, understandably.

The upshot of all this is, we are having to refund customers, we are losing products & losing customers fast!

Our business has survived decades, provided for a family of six during this time & we've always managed to maintain a profitable business. This appears to be over now & directly as a result of a shambolic exit from the EU.

What are families like ours suppose to do now? Our income is dwindling fast & it will soon no longer be viable to continue!

Thanks Boris, trust your family & friends are prospering through this!

The €26 is probably the admin fee not a tax. We have same problem offering our customers here in Spain a delivery to UK. Our courier has quoted a €31 fee for handling customs documentation and collecting any taxes. We had delivery from UK and it was €42 VAT, which we would have to pay anyway, and €36 charges.
We have had to add this cost to prices and looking for European suppliers wherever possible.

So we are promoting ourselves to UK consumers as a cheaper way to send things to their friends and family in Europe. We are a gift shop so it may not be so easy for you.

Of course instead of moaning about Boris you could give him a ring and he will tell you what you can do.

 

[japancool]

The €26 is probably the admin fee not a tax. We have same problem offering our customers here in Spain a delivery to UK. Our courier has quoted a €31 fee for handling customs documentation and collecting any taxes. We had delivery from UK and it was €42 VAT, which we would have to pay anyway, and €36 charges.
We have had to add this cost to prices and looking for European suppliers wherever possible.

I don't understand why these fees are so high. The fee for handling a delivery from the rest of the world isn't more than £12 or so, at least in the UK.

 

[gpietersz]

I don't understand why these fees are so high. The fee for handling a delivery from the rest of the world isn't more than £12 or so, at least in the UK.

Couriers raising prices because they know people have not yet shopped around for better prices? Maybe EU customs is particularly expensive or complex?

 

[japancool]

Couriers raising prices because they know people have not yet shopped around for better prices? Maybe EU customs is particularly expensive or complex?

Any more than it used to be?

 

[gpietersz]

Any more than it used to be?

From the UK, yes, as there were none. How much does dealing with EU customs cost from other countries outside the customs union? Its also possible nationalistic EU officials are deciding to be difficult over British exports often enough to affect the average price.

 

[Newchodge]

I don't understand why these fees are so high. The fee for handling a delivery from the rest of the world isn't more than £12 or so, at least in the UK.

Perhaps because of the teething problems and the parties being expected to make so many mistakes on their paperwork?

 

[japancool]

From the UK, yes, as there were none. How much does dealing with EU customs cost from other countries outside the customs union? Its also possible nationalistic EU officials are deciding to be difficult over British exports often enough to affect the average price.

Importing from Britain should be no more complex than importing from the rest of the world. There is no particular reason why handling fees should be any more expensive than importing from China, or the US, or Australia, or anywhere else.

 

[japancool]

Perhaps because of the teething problems and the parties being expected to make so many mistakes on their paperwork?

Then we should expect to see fees come down in the coming months.

I had an incoming delivery from Europe via UPS, and they only charged the standard £10 fee for handling customs, same as when I import from Japan.

 

[Mike Foulds]

I think the main fault through all of this is communications. Both in the run up to the referendum, when people were given misleading information by BOTH sides as to what would happen if the UK left the EU (Obvious example is the £350 Million a day for the NHS, which even Leave admited afterwards was false), what was definite, what was speculation, and what was still to be negotiated and agreed upon, and also some people just making assumptions.

The reality has been that voting "no" has just led to a rabbit hole of uncertainty, with some industries suffering more than others (EG the Seafood industry, who now has a huge amount of extra paperwork and cost to complete for each shipment), and exports to the EU dropping dramatically for the first 3 months of 2021.

Until everyone adapts to the new normality, I don't think we will fully understand the fallout and effects of leaving, but the quicker people accept and adapt, the quicker that will happen.

For the OP, I would suggest considering other methods of shipping, and, as has been suggested by others, dependant on your volumes, basing your storage in an EU country. It won't solve the problems, but may limit the damage.

Unfortunately, small businesses, who primarily export to the EU, were always going to be one of the big losers, in nearly ANY scenario, if the UK left the EU, so either moving yourselves to an EU country, or finding a new customerbase here in the UK, or elsewhere in the world, as suggested by others, may actually be the best solution for you, I am sorry to say.

Good luck finding a workable solution.

 

[gpietersz]

exports to the EU dropping dramatically for the first 3 months of 2021

But the balance of trade improving.

Covid might have something to do with it.

 

[Mike Foulds]

@gpietersz Yes, COVID has impacted, but COVID impacted more in 2020, and did not lead to the fall/issues as of the 1st Jan, nearly 3 months ago, those were narly entirely linked to BREXIT and people either being cautious and not shipping, or being caught out trying to ship. Whilst the situation is recovering, it is still down on last year, and there are definitely more hoops which both importers and exporters need to jump thorough to make shipments happen.

 

[MarkOnline]

Things are a bit up in the air, our business to the EU hasnt been affected that much, but our volumes were relatively low compared to other international markets. Its early days yet, give it more time to settle down and see how things are then. I think the carriers are milking the situation somewhat, but that may change. UK goods are generally sold at a lower price point than other EU businesses in the same market space.
Good luck.

 

[Pish_Pash]

The OP shows a woeful grasp (which is alarming given his target customer seems to be in the EU)

VAT is a consumer tax (& should only be paid once), therefore, for EU sales, he should have removed the VAT (that he used to give to HMRC)...end result is that his customer pays more or less the same in VAT...there may be an admin charge at the destination country for collecting the VAT ...and that's unavoidable.

Re free trade agreement (aka paying Duties)...that only benefits goods with Country of Origin that the EU has a free trade deal with (UK, Japan etc.)...if you're selling tat from Taiwan...Duty will still apply when selling to EU customers.

 

[jimbof]

What are families like ours suppose to do now? Our income is dwindling fast & it will soon no longer be viable to continue!

Set up with a courier firm on a Delivered Duty Paid basis and include those costs in your pricing?

 

[apricot]

We are in the same boat! We couldn't find any solution but move to EU.

We picked the Germany to move but Ireland is the best option as no need to learn a language and taxes are better than any other EU countries.

Alternatively, you can try to use a fullfilment center in EU like go2tigers or regionalexpress. It is very complicated and expensive to work with a fullfilment but it mght be better than moving somewhere else.

 

[Deleted member 335660]

I don't understand why these fees are so high. The fee for handling a delivery from the rest of the world isn't more than £12 or so, at least in the UK.

I agree, but I guess its about collecting UK's Import VAT tax. Hopefully once the systems get going the fees will come down.

 

[COVID20]

I though this was meant to be a source of information, support and help. It seems like most replies are people taking pleasure from the original posters pain.

This is a huge problem and there is no consistency when receiving goods into Europe.

Its a total mess and God only knows how to solve the problem.

 

[japancool]

and there is no consistency when receiving goods into Europe.

And why is that Britain's fault?

 

[Mr D]

I though this was meant to be a source of information, support and help. It seems like most replies are people taking pleasure from the original posters pain.

This is a huge problem and there is no consistency when receiving goods into Europe.

Its a total mess and God only knows how to solve the problem.

Oh solving the problem?
That appears to be either bypassing the border issue (setting up within EU) or else bypassing the EU as a market.

We could spend the next 20 years trying to get a 'better' trade deal, most likely improving one element by reducing another element.... which won't solve the OP's problems.