By guest writer, Marlene Bramley
The world as we know it has changed in so many ways over the last two years. The more it seems to have opened up to opportunities, the more it has closed down in practical terms. Brexit and Covid-19 are just two events that have changed the way we live and work forever. As an ecommerce shop owner in the United Kingdom (UK) or European Union (EU), there’s much more to think about now beyond your digital marketing and product descriptions.
Supply chains across the world were disrupted with Covid-19. The movement of goods and services had to pivot towards new logistical models. Brexit delivered a double blow to companies that had to move their goods across borders between the EU and the UK.
Movement of goods and services
According to EuroNews, British exports to the EU have been hardest hit by the new border formalities, despite the tariff-free trade agreement struck in December 2020. Although some sectors report improvement since the chaos in January, they say that the issues run deeper than just teething problems. A further delay in the UK to impose import checks on goods from the EU means European exporters have not been affected to the same extent.
The taxes that are imposed on imports and exports to and from the EU will affect the cost price of products. These taxes are likely to be passed on to the end consumer. Ecommerce stores on both sides of the Channel are affected. If you intend to continue trade across borders, it is important to keep up good relationships with EU suppliers and to be transparent about your trading practices. It might be wise to consider an ePOS system like Lightspeed to track and maintain good supplier relationships as well as control different pricing.
If your customers are currently in the UK, you might think you won’t be that affected by Brexit. Wait a second! It’s a good idea to look at international markets and exports. According to The Guardian, there will be a 6.7% loss in GDP growth in the UK over the next 15 years. Although your current business is growing, it might be shrinking over the next couple of years. Not all is lost though; McKinsey talks about emerging markets in Brazil, South Africa, China, and India growing and accounting for half of consumer spending by 2020. It opens up the rest of the world for international trade and, if your ecommerce store is in line with global trends, it bodes well for your future business.
How Brexit might impact your ecommerce business
Brexit affects much more than just the movement of goods and people. This article provides an overview with handy links to give you a generic review of the very complicated set of red tape and considerations that you might encounter if you want to export or import to and from the UK.
In broad terms, outside niche industries like medical supplies and agriculture, business owners will have to examine and revise the following areas:
- VAT refund claims
- Custom and excise duties for items outside the free trade agreement (or for which businesses opt to apply custom duties to), will be affected. See this Sage article on VAT after Brexit
- The import and export of products to and from Northern Ireland, which has its own rules. This affects both goods and services to and from Great Britain and the EU
- Grants and block exemptions as well as State Aid
- Fulfillment, transport, and logistics
- There are different eco-compliance rules that apply in the EU. They include packaging and labelling that refers to EU licensing
- Copyright, patents, and trademarks
- Emissions and environmental standards
- The transfer of personal data between the EU and UK covered in the General Data Protection Regulation (GDPR)
- Mutual recognition of qualifications and relevant licences – it includes audits, banking, and insurance licences
Authorised Economic Operators
Due to Brexit, there is a renewed focus on the Authorised Economic Operator (AEO) status that businesses can attain. It’s a way of listing your business as trusted and can potentially expedite customs processes. You can find out if your business qualifies and/or will benefit from attaining AEO status.
Custom agents to the rescue
If you are a UK business trading with EU countries, you may need to obtain an Economic Operator Registration and identification number (EORI). You can apply for your UK EORI number from the HMRC to ensure that you can still move your goods into and out of the UK. You can apply for your UK EORI number here.
On top of that, you may need an EU EORI number if you export to the EU. You need to apply for a number from the customs authorities in whichever state of the EU you deal with the most. You must get the number from the customs authority in the EU country where you’ll then submit your first declaration or request your first decision. There is a list of EU customs websites here.
One way to relieve the burden of red tape will be to use a customs agent to process your Brexit paperwork. There is an extensive article about the role of custom agents, the difference between custom agents and freight forwarding, advantages of using a customs agent, and where you can find one on the UK small business website.
It seems that the more we liberate the world with technology, the more we need to make sure people don’t take advantage of that freedom. The ray of light at the end of the tunnel, as it is with compliance of any kind, is that once you’ve done all the paperwork, you can go ahead with the business of growth and making a decent profit.
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