Post-Brexit Shipping (EU<->UK): Lack of information from traders

[Andrew66]

Checked Perry website again , you are correct , the order I made was on 31 December it was uk vat charged sorry , I should read things more carefully , that leaves only warlord on the ball 🤪

[Andrew Rae]

Cool thanks for the info.  That explains why VAT isn’t itemised then. I guess they're not using Royal Mail for that, as I thought the RM DDP hadn't launched yet.

Checked Perry website again , you are correct , the order I made was on 31 December it was uk vat charged sorry , I should read things more carefully , that leaves only warlord on the ball 🤪

Ah right, no worries. Yeah, up until Dec 31st 11pm GMT UK VAT would still be collected on EU orders.

I'm not sure only Warlord being 'on the ball' is necessarily a fair summary though. DDP will be pricey for Warlord to implement and I'd imagine there would be minimum parcel numbers requirements even to be offered that service. I highly doubt my tiny tiny business would qualify. Perry are probably doing all they really can right now by zero rating VAT on exports. As has been said earlier in the thread, in July non-EU businesses will be able to register for EU VAT through the IOSS. If the admin costs of another VAT return don't exceed the benefits, I can see a lot of businesses signing up. It is optional though, unlike (apparently) the ROW into UK equivalent.

I can also see a lot of non-VAT registered businesses selling through Ebay or Etsy, who from July will have to collect EU VAT on all sales through their marketplace. They're doing that now for sales into the UK. Hardly ideal though for many reasons.

But other than zero-rating VAT if you're registered and providing info to potential customers, there's not much more that can be done by a small business right now.

I do share you surprise in the OP about the lack of information from companies. Even though the trade deal was only signed on the 24th of Dec, the consequences of Brexit for export ecommerce to the EU have been obvious for years.

[Andrew66]

Yes that was my initial post that I was surprised at the lack of information and preparation from companies that do have a market in Europe, I accept that for many companies they are what can be called cottage industries, one man bands that do it for love of the hobby , maybe also the market in Europe is not substantial enough to warrant all the paperwork , it maybe that the main source of income is the Uk and they will take the hit of EU members choosing not to spend  in UK . It does seem that July will be the big tell , if companies sign up , as then only a handling charge will be levied which is bearable. The situation that troubled me most were companies that are vat registered and don’t charge zero vat which can mean a substantial rise in price. I could always tell my wife I want to move back home to Uk after 31 years in Ireland I don’t think that’s a starter😀

[Andrew Rae]

Yeah, without knowing the ins and outs for each VAT registered business, not zero rating does seem like a mistake. But I'm sure they have their reasons.

It does seem that July will be the big tell , if companies sign up , as then only a handling charge will be levied which is bearable.

There won't be a handling charge if a company registers with the IOSS. That company will collect VAT on your order at your local rate. It'll be just like purchasing something from your own country (from a VAT reg business at least). When the foreign company posts the order, they'll include their IOSS number on the packet, which means it will go through customs and be released without anything needing to be paid. That's for packages up to 150 Euro only though (inc postal costs). Above that and the company won't collect VAT, your local postal service or courier will and they'll charge their handling fee.

[Coenus Scaldingus]

Email from warlord
Hello Everyone,
As I’m sure you know, there has been many questions regarding our delivery service to European countries come January 1st and the UK officially leaves the European Union.
Our Methodology and motivation for this is very simple, we want to keep it as easy as possible for our European customers to continue building and painting models, and playing games with their friends.
 
From January 1st 2021, we will begin shipping our European orders with duties paid. This means there will be no additional tax to pay for EU customers importing goods from the UK, which also means there will be no additional delay in receiving your goods.
We will also be implementing European pricing over the next day, so you will notice that where you were previously presented a price in Pounds Sterling or other currencies, you will be presented with Euro pricing when shopping from outside of the UK and within Europe

Wonder how the Euro prices will correspond in terms of exchange rates (sounds like they are fixed prices rather than based on the current exchange rate?).

On a side note, I mightily annoys me when the EU and Europe are regarded as the same thing. Unless I've missed a major tectonic shift, the UK is still part of Europe. Multiple other European countries are also not part of the EU, and not all EU countries use the Euro. From the above, I haven't the faintest clue what exactly is going to change for whom.

[Fighting15s]

Yeah, without knowing the ins and outs for each VAT registered business, not zero rating does seem like a mistake. But I'm sure they have their reasons.

There won't be a handling charge if a company registers with the IOSS. That company will collect VAT on your order at your local rate. It'll be just like purchasing something from your own country (from a VAT reg business at least). When the foreign company posts the order, they'll include their IOSS number on the packet, which means it will go through customs and be released without anything needing to be paid. That's for packages up to 135 Euro only though (inc postal costs). Above that and the company won't collect VAT, your local postal service or courier will and they'll charge their handling fee.

Some of us are also still waiting for it to be clear how various commercially available shopping carts are going to cope with charging VAT on orders below 150 euros/£135 and not charging VAT on orders over that value, by country, as well as waiting for the ability to sign up for IOSS.

It's also not necessarily true that a company that signs up for IOSS won't levy a handling charge, because some will no doubt look at the time and hassle involved and charge for it. But probably not as much as the mail companies do!

One thing that was clear from the moment VAT changed for digital products that it would change at some point for physical products. Even some of us tiny one-man businesses have been more than aware of, and written about it, for years, and made business decisions accordingly.

[Andrew Rae]

It's also not necessarily true that a company that signs up for IOSS won't levy a handling charge, because some will no doubt look at the time and hassle involved and charge for it.

So they'd voluntarily sign up to having to file VAT returns etc only to implement a policy that would discourage EU customers from placing an order? I mean, it's an option but... 

[Fighting15s]

So they'd voluntarily sign up to having to file VAT returns etc only to implement a policy that would discourage EU customers from placing an order? I mean, it's an option but... 

They’ve only got to charge a smaller amount than most EU postal or courier services do for it to be more attractive.  And it can be built into the delivery charge so it doesn’t stand out. Once a business works out how many working hours it takes to do the paperwork, and that work ties up a person, a charge becomes inevitable.

[zemjw]

BBC article on the subject this morning - link. The interesting/scary aspect is that the couriers all seem to be adopting different approaches.

Royal Mail, for example, is charging an £8 fee it says "reflects the cost of clearing items through customs and presenting them to Border Force".

Meanwhile, delivery firm DHL says it is charging UK customers 2.5% of the amount paid to clear customs, with a minimum charge of £11.

Mail and freight company TNT is also adding £4.31 on all shipments from the UK to the EU and vice versa. It has said this reflects the increased investment it has had to make in adjusting its systems to cope with Brexit.

It will eventually all settle down and become the new normal, but "may you live in interesting times" flashes to the front of my mind far too often these days 

[Westfalia Chris]

They’ve only got to charge a smaller amount than most EU postal or courier services do for it to be more attractive.  And it can be built into the delivery charge so it doesn’t stand out. Once a business works out how many working hours it takes to do the paperwork, and that work ties up a person, a charge becomes inevitable.

This, definitely. I'd happily pay a moderate charge (5-10 GBP flat or a incrementally decreasing percentage of order value) if it means the package is delivered directly and it saves me a 40 mile round trip to the closest customs office during working hours.

[Andrew Rae]

They’ve only got to charge a smaller amount than most EU postal or courier services do for it to be more attractive.  And it can be built into the delivery charge so it doesn’t stand out. Once a business works out how many working hours it takes to do the paperwork, and that work ties up a person, a charge becomes inevitable.

Fair enough, a business can charge whatever they want, whatever works for their business.

To be clear, when I said there was no handling charge, I was specifically referring to the lack of a handling charge from the postal service. If a business want to replicate that handling charge in some form, go right ahead; it's still collected at the point of sale. But that's very much a business decision, rather than a consequence of the IOSS.

I want to replicate as closely as possible the situation for the EU customer when the UK was a member of the EU. That will require me to register with the IOSS, and it will make sense for me to also register for UK VAT at the same time (so EU customers aren't paying 17-27% more than all other customers). Both those things will require a total adjustment of my pricing, along with deciding how to handle sales on which VAT is not collected. Personally, I think it will be better for me to factor IOSS admin costs into that overall adjustment, rather than to levy a surcharge to EU customers only.

For businesses that are already UK VAT registered, they'll have to decide if the admin costs of the IOSS justifies a surcharge, or whether the increased sales (or rather matching sales from the time when we were in the EU) compensates for the extra costs. If you want to maximise EU sales, as surcharge doesn't help, I don't think that can be disputed.

[Andrew66]

I think most eu customers would absorb a moderate increase in shipping charges that would compensate the manufacturer for extra time and charges if they do register in July ,rather then face excessive courier processing charges and double vat

[Citizen Sade]

Double VAT‽ If there’s still a VAT-registered British company refusing to remove VAT for export customers, I suggest you name and shame them. If such beasts exist, I doubt they’ll be in the export business for very long.

[Andrew66]

Most websites who are vat registered have it on their site or it’s easy enough to check on the uk vat register , if they are not charging at zero vat than your will receive a double whammy

[Andrew Rae]

Double VAT‽ If there’s still a VAT-registered British company refusing to remove VAT for export customers, I suggest you name and shame them. If such beasts exist, I doubt they’ll be in the export business for very long.

There are loads. They're not refusing to remove VAT on exports, they have a different net price for exports and are zero-rating VAT on those orders (unless they just put everything through with UK VAT so they don't have to get proof of postage on all exports).

There could be many reasons why they're doing this. Warlord are doing so because they are sending parcels Delivery Duties Paid, avoiding later costs to the customer. But Warlord are not collecting EU (or UK) VAT at the point of sale on those orders, Warlord are getting a bill (inc VAT and fees) from their shipping company at a later date. GW are doing the same I believe, certainly Forge World are.

For others not using DDP, I suspect it's a UK-in-the-EU hangover from having a different net price for all location for which VAT was zero-rated, ie anywhere not EU up to Dec 31st 2020. Their net price to zero-rated locations equals the gross price to the UK. They've been trading on those terms for years and would be a big change to have a consistent net price to all locations. Unfortunately, this sucks hard for EU customers (just like it would have sucked for, say, Norwegian customers). EU customers are effectively (but not in reality) charged VAT twice only compared to a UK customer who was charged a lower net price in the first place.

If a business has had a single net price to all locations prior to leaving the EU, I suspect they're continuing that practice now, which benefits EU customers in that they're not effectively (but not in reality...) charged VAT twice.

(I'm not VAT registered so no VAT is collected from anyone, so don't name and shame me, thanks)

Edit: Perhaps those businesses which do not have a single net price to all locations are just treading water until July when they plan to register with the IOSS. If they switch to a single net price now, they will lose 16.7% of their revenue on all export sales. Given the size of the US market in particular, this would be a big hit and maybe a temporary hit to EU sales (which are hit anyway due to postal handling fees) is a better option.