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BREXIT - what it means for small manufacturers

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fcb:
For sure Simon, the VAT system is largely simple and effective. And the changes going on in the EU from 1st July 2021 will not have any material effect on UK businesses.

My primary concern is that EU customers from 1st January 2021 will be charged VAT locally at the point of import/delivery - and whilst it doesn't really matter where the VAT is paid, the extra friction and likely 'fees and disbursements' that will be charged to collect the VAT will be a PITA for EU customers buying from the UK.

Example (assuming exchange rate 1.11)

UK company selling a £30 thing to an German customer before 1st Jan 2021:
£36.00 (£30.00+VAT) paid by customer to UK company
£6.00 VAT forwarded by UK company to tresurary
thing costs customer ~€39.96

UK company selling a £30 thing to an EU customer on/after 1st Jan 2021:
£30.00 paid by German customer to UK company
£5.70 VAT (equivalent at some likely rubbish exchange rate) paid by German customer to German treasury via postal service or courier.
€6.00+ paid by German customer to postal service or courier for the service..
thing costs customer €33.30+€6.33+€6.00=~€45.63

On top of the extra cost for the customer there will likely be another day added to the delivery cycle and inconvience to the customer.

Can any EU forum members contribute examples of buying items from outside the EU, in particular the costs and delays incurred??

Simon:
Yes well we wanted to be outside of the EU so now don't share the little common stuff there was. Hopefully a simple system can be devised which should also be about regulating the carriers and what they can charge. DHL will just send me a demand for money and yes I have often paid more in fees than VAT and then not even have the decency to send me an invoice, virtually no record remains of the transaction and if I were VAT registered that is a problem but DHL are bigger than me so can tell me to eff off just like curries/PC world did when I asked for an invoice after filling in a form where they asked for my company name if any. We need laws and rules about how companies deal with this as a lot of the paperwork could be cut out or made simpler as it actually takes more time for small businesses to chase down paperwork that they have to have by law because a big business can tell them where to stick it whilst doing a sweetheart deal with HMRC.

So DHL whilst doing minimum work and charging me £11 a go are making a small fortune out of this racket.

SilverSolder:

--- Quote from: fcb on December 28, 2020, 02:02:00 pm ---[...]
My primary concern is that EU customers from 1st January 2021 will be charged VAT locally at the point of import/delivery - and whilst it doesn't really matter where the VAT is paid, the extra friction and likely 'fees and disbursements' that will be charged to collect the VAT will be a PITA for EU customers buying from the UK.
[...]

--- End quote ---

One example I have is sending a package from the US to a Northern European country...  the package could not be delivered to the door, it could only be picked up at the post office and only after paying VAT and processing fees.  In this case, the recipient ended up having to pay VAT on a much higher estimated value of the contents than the value that had been declared on the package!  In other words, the tax authorities are free to make things up as they go along,  just as senders are free to make up a value when they send it!  :D

Simon:
well this is where full invoices should be provided and stuck to. I guess that importing businesses could be spot check audited on their accounts that need to show what payment for goods a payment for VAT relates to. It would soon be clear if any fiddling was going on. For VAT registered companies not a problem as whatever it is it will be claimed back anyway. Non VAT companies would have an incentive to cheat. For individuals it is a nightmare and it needs clear rules. But unless countries cooperate you can't really prove much. I mean think of all those "gifts" from china. The Uk wants to "take back control"? it never exerted what control it did have and then got investigated by the EU.

fcb:
The fundamental argument/problem here is not whether or not VAT should exist - just on how it is collected, and the costs involved in collecting it.

DHL/Fedex both a rubbish at invoicing correctly and in a timely manor - and we have an account with DHL! UPS are marginally better (again we have an account with UPS) but run some steam-driven websites that can be very tricky to prise an invoice out of.

Suspect there will be innovation in the space to lower the costs of collecting the VAT, perhaps a mechanism that allows the customer to pay online when they get a tracking# - DHL do something like this when we receive some stuff from China.

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