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Thread on why Brexit has disrupted e-commerce and why it matters more than you might think
We’re getting lots of reports of people being hit by unexpected VAT charges and delays on their online deliveries when the vendor is in Europe.
Why is this happening?....1/
We’re getting lots of reports of people being hit by unexpected VAT charges and delays on their online deliveries when the vendor is in Europe.
Why is this happening?....1/
UK customers buying goods from relatively small EU vendors before Brexit could pay their VAT at the point of transaction under the EU’s distance selling regulations.
And, importantly, these vendors could charge the local rate of VAT and deal with their own tax authorities....2/
And, importantly, these vendors could charge the local rate of VAT and deal with their own tax authorities....2/
Since 1 Jan our online buyers don’t benefit from these EU regulations.
The EU vendor now has to register with HMRC and charge UK VAT in order to ship to UK (a big hassle and many won’t bother) or ship the item to the UK and let the buyer pay the UK VAT owed upon receipt...3/
The EU vendor now has to register with HMRC and charge UK VAT in order to ship to UK (a big hassle and many won’t bother) or ship the item to the UK and let the buyer pay the UK VAT owed upon receipt...3/
Obviously bad news for UK buyers.
And it’s not just the unexpected charges – if small EU vendors stop selling to Brits we have less choice and lower value...4/
And it’s not just the unexpected charges – if small EU vendors stop selling to Brits we have less choice and lower value...4/
And this is not economically trivial.
The Brits are some of the biggest internet shoppers in the developed world, with almost 80% of the population estimated to be doing it.
Also estimated that 11% of our online shopping comes from the EU...5/
https://www.fintechfutures.com/2019/02/e-commerce-the-biggest-overseas-markets-for-uk-consumers/
The Brits are some of the biggest internet shoppers in the developed world, with almost 80% of the population estimated to be doing it.
Also estimated that 11% of our online shopping comes from the EU...5/
https://www.fintechfutures.com/2019/02/e-commerce-the-biggest-overseas-markets-for-uk-consumers/
But it's vital not to ignore the impact of Brexit on UK online vendors - small businesses that sell online.
They also benefited massively from the EU VAT charging rules, being able to sell very easily across the bloc...6/
They also benefited massively from the EU VAT charging rules, being able to sell very easily across the bloc...6/
Now they have to either force their EU customers to pay VAT on receipt (not a way to retain customers) or register with each and every national EU tax authority into which they want to sell....7/
The owner of the UK-based sustainable fashion brand VILDNIS @UllaVitting tells me before Brexit she was shipping daily to the EU but the administrative nightmare means she's had to put all shipping to the EU temporarily on hold...8/
How many more UK firms are in likely to be in this nightmarish situation?
@Richard_Asquith of the tax firm @Avalara tells me his inbox is full of business owners saying
"I’m closing down, this is existential for me"...9/
@Richard_Asquith of the tax firm @Avalara tells me his inbox is full of business owners saying
"I’m closing down, this is existential for me"...9/
He estimates that there are some 27,000 small UK vendors who are likely to be negatively affected by all this.
Not exactly a boost for domestic retail entrepreneurship....10/
Not exactly a boost for domestic retail entrepreneurship....10/
Boris Johnson infamously said on Christmas Eve that there would be no new non-tariff barriers between the UK and the EU as a result of Brexit...11/ https://twitter.com/BenChu_/status/1342153705920081924?s=20
There are – and this is one of them.
And for millions of UK online shoppers and tens of thousands of small British firms it’s a very important and damaging one.
More here for @indypremium
ENDS https://www.independent.co.uk/independentpremium/news-analysis/brexit-online-shopping-vat-disrupted-b1790813.html
And for millions of UK online shoppers and tens of thousands of small British firms it’s a very important and damaging one.
More here for @indypremium
ENDS https://www.independent.co.uk/independentpremium/news-analysis/brexit-online-shopping-vat-disrupted-b1790813.html
