Brexit in a nutshell
After 4 years of uncertainty and confusion since the Brexit referendum, the transition deadline is here for British businesses. At midnight on the 31st December 2020 the United Kingdom will leave the European Union’s single trade market and customs union effecting over 200,000 businesses in the UK. It's likely the UK government will not reach a mutual free trade agreement with the European Union, if this happens, the UK will automatically operate under the World Trade Organisations regulations. UK eCommerce businesses that currently sell to countries outside the EU, will now have to apply the same rules when trading with countries in the European Union.
How are British businesses preparing for Brexit?
There are three main options for eCommerce business to consider when planning for the end of the transition period (31st December). These include the following:
Option 1: Blockading European sales
In the short term, blocking sales to EU countries would save online UK businesses a lot of costs when exporting to the EU. Shipping costs, customs tariffs and distribution delays are all likely to increase and cause chaos at the borders which will cause a knock-on effect of disappointment for their customers. However, in the long term this will limit their commercial growth in the UK, reducing their competitiveness and growth as a business. Alternatively, they can continue to export to the EU and leave the import VAT to their customers who will have to pay these fees upfront before they can be released for delivery. However, this is likely to result in complaints and loss of repeat business from EU customers. Additionally, Amazon FBA Sellers must pay import VAT and be registered for EU VAT or face being banned from their services.
Option 2: Setting up shop in the EU
fulfilmentcrowd has been operating in the EU for over 12 months now with fulfilment centres in The Netherlands and boasting two sites in Bocholt, Germany. Our EU VAT registered clients benefit from close access to large ports and transport links to the European market and the same reliable order fulfilment service that we operate internationally. In these circumstances’ businesses will also benefit from distance selling thresholds which are due to be stripped from UK businesses at the end of the transition period. This means increased access to EU markets that we benefit from now. We work with a large number of online retailers who have made the move and have contacts in the Department of International Trade who can help advise on the transition of moving stock into the EU. Joining fulfilmentcrowd also gives online retailers the added benefit of splitting their stock between multiple international locations without compromising on service quality.
Option 3: Continuing to export to the EU
As scary, confusing and complicated as it might seem, the UK government has set out clear guidance for UK businesses to follow in order to prepare for the end of the transition to continue goods flowing in and out of the EU. Customs declarations will now be mandatory as part of the Single Admin Document C88, which must be supplied with all imports and exports manually or online through HMRC CDS. The transition checklist includes:
- Applying for new EORI number: All UK business will require two EORI numbers (Economic Operator Registration and Identification) one UK and one for the EU. UK EORI numbers are already being automatically generated by HMRC, but businesses will need to apply for an EU EORI number in order to be compliant at EU borders.
- Correct Commodity Codes: These are needed to make sure your goods are compliant with EU regulations. If businesses already have EORI numbers they can apply for binding commodity codes through HMRC that last up to 3 years.
- Appoint a Fiscal Representative: 19 of the 27 EU countries require foreign businesses to appoint a local fiscal representative to manage tax reporting and have a shared liability for payments. Typically, these can be very costly, however, without one businesses can face heavy fines.
How are fulfilmentcrowd helping UK eCommerce retailers?
fulfilmentcrowd are working closely with our clients and integrated carrier partners to ensure a smooth transition into the new year. Our award-winning platform already has the power to simultaneously connect your online marketplace and chosen carriers under one roof to give you complete clarity on the progress and reporting of your order fulfilment. In the very near future, our platform will automatically retrieve customers data and send an electronic invoice to your carriers. Help can also be found via the UK government who are offering training grants for small businesses to learn about customers declarations and help with tariff calculations. Find out more here. The government have also introduced Transitional Simplified Procedures that allow business to postpone duty payments for several months to allow time for them to adjust to a no deal Brexit.