General > General Technical Chat
BREXIT - what it means for small manufacturers
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Simon:

--- Quote from: SilverSolder on December 24, 2020, 06:52:12 pm ---
--- Quote from: MadScientist on December 24, 2020, 05:54:39 pm ---The big issue for small internet  traders selling into the uk from the eu and vice versa is customs clearance around vat
[...]

--- End quote ---

Is there a lower limit where they won't care?  or is e.g. ordering a tube of toothpaste from the EU now going to become a major exercise...

--- End quote ---

My understanding was that VAT has always been due. Whilst in the EU it would have been like buying selling in the UK with VAT added. If you were non VAT registered you paid VAT to the seller even if in the EU, if you were VAT registered you would not pay the VAT but would presumably have it charged when it landed. The rest of the world didn't charge VAT and UK customs were supposed to collect it on arrival. I do remember something about the EU looking into the fact that the UK was not charging the VAT on all the items that were due it. I expect there was an exemption for small items but even on large items getting charged was hit and miss, but then the UK gov has always been shy about collecting taxes hence where we are now.
Simon:

--- Quote from: bd139 on December 26, 2020, 08:42:21 pm ---BSI is still around. One of my neighbours works there as HQ is only up the road. They’re still relevant and there is alignment across different standards bodies worldwide now. They mostly just assert and syndicate international standard as well as contributing  to them.

--- End quote ---

Yea, most BS's became ISO's with the same number, that is international beyond Europe, some remained BS particularly UK specifics like wiring regulations.

What really pisses me off is that the standards the world has been operating under have been sold to the UK public as bad for UK business and preventing us being even better. Yep that's right, there is this insidious lie out there that because of these standards we are prevented from doing even better than the basics set out in the standards which defies basic logic but if you think how's stupid the average person is, now realize have of them are even more stupid than that. So people think we will just dump these standards many of which may have actually been created in the UK in the first place so that we can be cheaper and more competitive, totally missing the point that parents are now for example asking without realizing it that they want toys for their children to have paint on with lead in, because if you ditch everything that will become legal again. People don't realize that most of these standards are about their safety and protect them and you flipping bet that if we don't stick to them no one will want to buy our junk! People actually don't get the concept that it is the buyer that sets the standards they are willing to accept, and if they don't like yours, they just don't buy. We can make what little we make however the hell we like if we kinda just don't care that no one will buy it outside of the UK. I wonder, are our political and industrial masters actually going to run a dual system so that internally we get dangerous junk made cheaply but everything exported still complies? probably not practical but they'd do it if it made economic sense.
Simon:

--- Quote from: MadScientist on December 24, 2020, 07:00:50 pm ---
--- Quote from: BravoV on December 24, 2020, 06:15:42 pm ---Ok, many Brits posters here, mostly with negative aura  :-\, as an outsider, what are/is the good points out of these ? The bright side only please.

--- End quote ---

There is no upside , quite frankly , the illusion of freedom is just that ,

--- End quote ---

I think we needed to define freedom in the first place. Lot's of people jumping up and down about it but if you asked them to define it they would not be able to tell you or you would get a load of incoherent gibberish. Living in a society is about giving something up in return for security. I can't say i want to be free to the extent that I should be able to murder people I don't like but then want to live in a society that locks yo up for murder and what about the freedom of my victim. People seem to not see that terms like freedom and rights are in the context of other peoples freedoms and rights and that when you are granted these two things you are also taking on responsibility to respect other peoples freedoms and rights, so you can't do exactly as you please. The same goes with international relationships.
fcb:

--- Quote from: Simon on December 28, 2020, 09:19:38 am ---
--- Quote from: SilverSolder on December 24, 2020, 06:52:12 pm ---
--- Quote from: MadScientist on December 24, 2020, 05:54:39 pm ---The big issue for small internet  traders selling into the uk from the eu and vice versa is customs clearance around vat
[...]

--- End quote ---

Is there a lower limit where they won't care?  or is e.g. ordering a tube of toothpaste from the EU now going to become a major exercise...

--- End quote ---

My understanding was that VAT has always been due. Whilst in the EU it would have been like buying selling in the UK with VAT added. If you were non VAT registered you paid VAT to the seller even if in the EU, if you were VAT registered you would not pay the VAT but would presumably have it charged when it landed. The rest of the world didn't charge VAT and UK customs were supposed to collect it on arrival. I do remember something about the EU looking into the fact that the UK was not charging the VAT on all the items that were due it. I expect there was an exemption for small items but even on large items getting charged was hit and miss, but then the UK gov has always been shy about collecting taxes hence where we are now.

--- End quote ---
The VAT situation has long been biased incorrectly.
Here's an example of how it works at present (UK) and will carry on working till at least 1st July 2021 between EU members.

Company in Luxembourg (17% VAT) sells a product to Consumer in Denmark (25% VAT) - Danish consumer is charged 17% VAT.
Company in Denmark (25% VAT) sells a product to Consumer in Denmark (25% VAT) - Danish consumer is charged 25% VAT.
Company in Luxembourg (17% VAT) sells a product to Company in Denmark (25% VAT) - Danish company is charged 17% VAT, and can reclaim this as INPUT tax (typically, there are exceptions).
Company in Luxembourg (17% VAT) sells a product to Consumer in Denmark (25% VAT) and supplies VAT number to Luxembourg company - Danish company is charged 0% VAT.

There are exceptions to this if a company sells beyond a certain threshold, but in general this is how it operates for the smaller companies.  This has always struck me as asymetric (neutral as whether it's good or bad).  In the UK this is part of the reason why CD/DVD retailers used to operate warehouses in the Channel Islands (the other reason was a VAT threshold on imports).

From 1st July 2021 this will change in the EU.  https://ec.europa.eu/taxation_customs/business/vat/modernising-vat-cross-border-ecommerce_en
The benefit of having a warehouse in a low VAT regime will largely disappear and the overall EU VAT take will apparently increase by €7bn - which essentially comes out the pockets of EU citizens... A more level playing field, by increasing the height of the soil (feel free to insert another synonym for soil)?

Simon:
The problem you have is that the EU is not as tightly joined up as people crying about their independence think and despite a common currency they all have their own financial laws. If you are a consumer and you choose to buy elsewhere you just have to pay what the law says where you purchase, you are the one that chose to buy from another country.

As a VAT registered business it makes no difference. To deal with what you point out if a two VAT registered companies in the EU do business no VAT is paid on the sale. The importing country can/should apply VAT on import, the buyer will of course reclaim the VAT. When the buyer goes on to sell the goods in their country they will have to charge VAT, so that will be the VAT they reclaimed on import and VAT on the mark-up. The novelty in the EU was that for sales to consumers in other EU countries VAT was charged as though it was the same country and no import VAT on the consumers side. B2B transactions operated as they would anywhere else, if the buyer is not in the country (or EU for an EU country) then no VAT is charged and none is owed to that countries government. The receiver is then due to pay the VAT to their government at their local rate which they will reclaim anyway and then charge their customers and pay that to the government.

VAT is actually very simple and very effective. People pretend it's complicated because they just don't like paying tax! The simplicity of the VAT system means that it cannot be circumvented as easily as corporation tax and businesses do not like that so pretend that the system is illogical and should be scrapped.

It's true that the same tax is collected and then refunded as the goods move through VAT registered businesses until the point of sale where the VAT collected from the consumer cannot be reclaimed. But it's very simple and fool proof and in reality each company just pays or is refunded the difference in VAT owed either way. So If in a quarter which is the VAT period I buy £1'000 worth of stock and pay my £200 in VAT but then sell £500 worth of that stock at £1'000 thus charging £200 in VAT I don't owe the government anything and they don't owe me. If the next quarter I sell another £1'000 worth oy sale and collect £200 in VAT but have not bought any stock that I am due a VAT refund on I then have to pay the £200 to the government.
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