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news
Brexit.pngBrexit: New VAT rules see EU cycling brands stop online sales to UK shoppers
The end of the Brexit transition period is already impacting the cycling industry – and while the dust is likely to be settling on the UK’s new relationship with the EU for some time to come, and what the implications of that might be, we’re beginning to get an idea of a few of the emerging issues.
We suspect that it will take several weeks at least for the situation to become fully clear for a number of reasons, not least the ongoing disruption caused by the coronavirus pandemic.
Another issue is that with the deal between the UK and the EU only signed off on Christmas Day, and last Monday effectively being the first full working day back on both sides of the Channel, many businesses simply will not have had time or resources to wade through the documentation and assess the implications of the new relationship.
One change that has hit the headlines is the UK’s new rules on value added tax (VAT) and its impact on brands and retailers in the EU selling to customers in the UK – with some having suspended, whether temporarily or permanently, sales to consumers here.
As we reported last weekend, online retailer Dutch Bike Bits – owned by David Hembrow, the long-time cycling campaigner who moved from the UK to the Netherlands in 2007 – says it can no longer accept orders from UK customers due to a change in VAT rules. The story has subsequently been picked up by the mainstream media, including the BBC.
We’ve also seen Brooks England, which makes its saddles in the West Midlands, suspend orders via its website to shoppers in the UK, because goods are dispatched from its parent company’s facility in Italy. Its products are still available here via bike shops, and while the company hasn’t said that the VAT changes are specifically to blame, we suspect they are part of the equation.
> Brooks England stops online sales of ‘Made in Britain’ saddles to UK shoppers – because of Brexit
Campagnolo too has said that “all sales with delivery to the UK are suspended until new updates,” pending “EU dispositions with regard to the Brexit situation.
HM Revenue & Customs (HMRC) says that with effect from 11pm on 31 December, when the transition period ended, consignments of goods with an aggregate value of £135 or less (excluding shipping costs) will have VAT added at the point of sale, whether in the EU or elsewhere abroad.
That means that brands or online retailers based abroad that sell directly to shoppers in the England, Scotland and Wales (separate rules apply to Northern Ireland) must register with HMRC for VAT and account for the tax on goods sold here below that threshold, including paying an annual fee to do so – something that Dutch Bike Bits, to return to that example, says makes it impossible to continue selling to people here due to the costs and the administrative burden involved.
The rules are similar, to some extent, to ones drawn up by the EU to modernise VAT for cross-border e-commerce that were due to have come into effect on 1 January but which, due to the coronavirus crisis, have been pushed back until 1 July – the big difference, of course, being that the UK is now a third country.
HMRC says that the rules do not apply to goods sold through online marketplaces (OMPs) “where they are involved in facilitating the sale,” with the OMP being “responsible for collecting and accounting for the VAT.”
So, signing up to an OMP such as Amazon, the world’s largest retailer full stop, might appear to remove a lot of the burden for small businesses in the EU looking to sell into the UK – except for one crucial change the online giant made towards the end of last year.
As of 18 December, with the end of the transition period looming, Amazon dropped the UK from its Pan-European programme – meaning that retailers in the EU wanting to sell to customers in Great Britain would have to fork out to ship their goods to the company’s warehouse here, something for which Amazon previously footed the bill.
Other issues we are aware of include increased shipping costs, both as a result of Brexit with carriers specifically increasing their rates from the EU to the UK due to the additional paperwork involved, and due to shortage of containers globally chiefly resulting from the coronavirus pandemic, as well as confusion regarding what are termed ‘rules of origin’, and we will be looking at those separately in the coming days.
Simon joined road.cc as news editor in 2009 and is now the site’s community editor, acting as a link between the team producing the content and our readers. A law and languages graduate, published translator and former retail analyst, he has reported on issues as diverse as cycling-related court cases, anti-doping investigations, the latest developments in the bike industry and the sport’s biggest races. Now back in London full-time after 15 years living in Oxford and Cambridge, he loves cycling along the Thames but misses having his former riding buddy, Elodie the miniature schnauzer, in the basket in front of him.
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90 comments
Just to check is this still road.cc or vaccine.cc? A lot of people are talking about eu vaccine approval but I thought the article was about bike parts...
"Now the transition period is over, we’re starting to see the impact of leaving the EU"
Careful, Road.cc, you're beginning to sound like the BBC.
How awful to sound like the British Broadcasting Corporation! Of course road.cc should sound some illiterate git in order to be truly respectable.
'Of course road.cc should sound some illiterate git in order to be truly respectable.....'
In the interests of literacy may I suggest that you insert 'like' in that sentence between sound and some, as you're trying to make a comparison.
In the interests of decency it would make for a more constructive discussion if you could make your point without descending into abuse, safe behind your 'nom de guerre.'
Ah! Who cares! The UK has taken back control - that's what counts! And look how brilliantly they're coping with the covid pandemic, too! One more reason to celebrate! Rule Britannia!
Ooh dear ... naughty Germany breaks EU collective agreements to secure 30M extra doses of the Pfizer vaccine for itself ... and just two hours after Ursula VDL insisted that individual countries cannot sign separate deals;
https://www.politico.eu/article/germanys-coronavirus-vaccine-side-deal-a...
For me, that's a double-edged sword. I always felt it was a bit odd for our Eurosceptic politicians saying 'we can't do this 'cos of EU rules' when France and Germany were just quietly ignoring said rules without any real consequences. Surely it would be better to quietly get on with X if you really want to do X rather than loudly trumpeting on about how you'd like to do X but can't.
Interesting article. I live in Europe and buy from UK based companies. Just priced a set of Hunt Wheels at circa 1000pounds, and I have to pay 304pounds import duty plus delivery is that correct.
It shouldn't be according to Hunt Wheels own website. It took me all of two minutes to find out;
"European Union
All payments on eu.huntbikewheels.com are collected in Euros. We are based in the UK and even though the UK is no longer part of the European Union, we will cover all duty and taxes for orders sent to the EU."
Here's the link if you can't find it for yourself;
https://help.huntbikewheels.com/support/solutions/articles/43000456067-t...
FFS you could get some Boras for that...
I have to say I am far more concerned about the UK's access to Covid vaccines right now rather than some obscure supplier of minor cycle parts. It's been hugely advantageous for the UK to be out of the EU's collective purchasing and medically-approving scheme __ which frankly has been a joke.
The French vetoed a large order for the Pfizer vaccine because they wanted a good chunk of the money spent on their own Sanofi vaccine (which looks a very long way from approval if it ever happens).
Dutch Bike Bits and other such small suppliers simply need to use a UK distributor (as happens now from suppliers all over the world) if they want to avoid collecting VAT at the point of sale. The distributor will do it in the UK for them.
The fuss the UK government made about being able to approve vaccines faster because of Brexit was all made up though - in the transition period we still had the same legal basis as when in the EU, and that had never prevented early approval.
It would be rather easier to welcome the sunlit uplands if we could rely on being told the truth about the sun, the light and the land.
Telling the truth has never been one of Johnson's strong points...
Utter bollocks. The UK drug approval agency is our own MHRA. The EU's agency is the EMA, originally based in London but moved, in a fit of post-Brexit pique, to Amsterdam about 18 months ago. As a result the EMA is massively under-staffed and also chronically under-funded ... and on which 450M people are relying upon for their vaccine approvals.
The UK has now approved 3 vaccines from all over the world and has also secured 370M purchase options of said vaccines for 68M people. The EU has only approved 1 vaccine and has barely 300M purchase options ... for 450M people! The UK has to date provided over 1.3M vaccinations, more than double that of all the 27EU nations put together so far.
Welcome to the 'sunny uplands' of post-Brexit Britain. I hate to say "I told you so" ... but we did ... many, many times over.
The EU vaccine shambles has turned out to be the perfect example of how a fleet-footed and fast-acting independent UK is overtly superior to the slow-acting and squabbling EU.
Next slide please.
https://fullfact.org/health/coronavirus-vaccine-brexit/
Indicates that ministers did lie about whether Brexit does up the process. Each EU nation was free to do the same, even though "shackled as a vassal state". Germany decided to do more work before approving: https://www.reuters.com/article/health-coronavirus-britain-spahn/germany...
If the EMA was soley responsible for approval across the EU, how come we had the MHRA in place at all? And just why would you want "unelected Eurocrats" cluttering up your uplands after Brexit? Why on earth would they not relocate an office that no longer meant anything to the UK? Would it matter to you if we just left a regulatory body of ours in Brussels post-Brexit?
I think you'll find that my point was about lies and obfuscation from the UK government on approval, so procurement is not really relevant.
And in case you don't believe fullfact, here's Kate Bingham, the person who was in charge of the whole shebang for the UK, saying explicitly that being in or out of the EU was irrelevant.
Add Rose cycles to that list. They too will not deal with customers from the UK.
Slow clap Brexiteers.
This is a rather frustrating article on several counts:
1. How much is the annual fee to HMRC for VAT registration? If this is a huge sum it would explain why smaller retailers have decided to stop exports to the UK. But if it's a small sum or even pro rata'd it's harder to see it acting as a real barrier - not least because HMRC VAT and VAT scheme fee payments can be automated very easily.
2. Of the examples given, the owner of Dutch Bike Bits has reportedly been a long standing critic of brexit and very active politically - and should be acknowledged as such. Indeed the BBC have been criticised in their reporting for failing to disclose this in the interests of balance in their own reporting.
3. The example of Brooks is A-typical in that their ecommerce is run from central europe for products made in the UK. The root cause of the problem isn't VAT or customs duty - it's that the transport the product 1,000 miles from the UK and then back to the UK to customers. That's just daft when they could ship to UK customers directly and avoid assoicated carbon emissions.
Anyway, I ordered some stuff from Germany two days ago. The total order was c£180 and it's being delivered by DHL on Monday - I paid VAT at 19%. Which just goes to show the sky hasn't fallen in yet and in other sectors companies have already worked through the new admin requirements (whether real or imaginary) and are quite happy to continue selling to customers here.
If this is NOT a problem for EU companies trading with other countries around the world, and it appears that it isn't, then it is not a Brexit problem. The UK just needs to look at some of those countries and choose a solution.
The VAT arrangements are a separate matter to Brexit and long overdue.
It's hardly a surprise that there's a small amount of disruption within the first week of the new VAT arrangements.
But feel free to trot out all your Brexit clichés, will be great to hear them again.
https://www.thetimes.co.uk/article/amazon-prices-rise-as-chinese-sellers...
This is a very good read (twitter thread) by FT journalist Peter Foster.
https://twitter.com/pmdfoster/status/1347244528592433153
The reality is that Brexit is a disaster for many UK companies trading with the UK. It is not about cliches, just fact that EU trade is now more difficult and expensive.
We can however now sell a bit more cheese in Japan......
That seems a pretty biased source but there are some good points nonetheless. The conclusion that the UK will fall behind the EU economically seems directly at odds with the recent forecast from the Centre for Economics and Business Research which predicts the UK pulling ahead of the EU over the next few decades.
Sacrificing some trade with the EU for greater trade with the rest of the world seems perfectly reasonable given growth trajectories and our own balances of trade.
Now that the EU deal has been finalised we can pursue trade deals worldwide increasing our opportunities for growth further.
Pretty much the conclusion of every analysis of Brexit is that it will have a negtive impact on UK GDP.
Institute for Fiscal Studies is typical, about a 2% reduction in GDP.
https://www.ifs.org.uk/publications/15079
For sure you can find a few right wing think tanks who paint lovely rosey pictures of trade with the rest of the world (which we mostly could do anyway in the EU).
Most of our trade deals signed so far are just roll overs of existing EU arrangements. (Except a bit more cheese to Japan....). Also we cannot diverge too much from EU regulations without risking tariffs, so Brexit is truly a lose-lose for everyone involved.
Let's wait and see.
Trade deals signed so far are by necessity only minor tweaks of existing deals.
We now have the freedom to be far more ambitious in our trade negotiations and tailor those negotiations far more specifically to the needs of the UK.
That sounds great.
Give me an example of an ambitious trade arrangment you would like to see?
CPTPP has a lot of potential for the UK.
I'd like to see a trade deal with the US too but obviously there are some thorny issues there with food standards/agriculture.
The EU already has trade agreements with CPTPP member states.
So the reality is although we might "join" the CPTPP it is unlikely to offer any substantial benefits over existing trading relationships. Some tweaks at the edges.
You are correct that a big stumbling block in deals with Mexico/NZ/USA will be over agriculture. Any deal is likely to severly impact the UK farm sector.
No doubt the UK will bend over backwards to join CPTPP, if only to help justify its leaving of the EU.
Only the other day Boris Johnson asked business leaders what changes they would like to see regarding regulation. Even after 5 years Boris and co. have no idea what tangible benefits Brexit can bring.
The EU does not have trade deals with all CPTPP countries.
If the EU can negotiate satisfactory deals with Mexico, NZ and Australia (last 2 still in progress) then why can't the UK?
The fact that he can ask business what regulation changes they would like is progress. An advantage of having far more control over said regulations.
Likelyhood is the EU trade deals will be largely the same as what the UK will get. Unlikely there will be any significant divergance. e.g. Japan deal UK can sell a bit more cheese there.
So trade deals outside of the EU offer little scope for improvement and any significant divergance will run into problems with the EU Level Playing Field arrangements. Any big changes in food (e.g. NZ Lamb) will be unpopular so unlikely to happen.
As the majority of economists have said, the net loss to the UK is about 2% on GDP. Tweaking trade deals with very small trading partners such as Mexico will not make up for losses with EU trade.
The fact that Boris and co. have to ask, after 5 years of promoting the "benefits" is beyond belief. They literally have no idea what to do now that Brexit is completed, other than jingoistic flag waving.
I think the UK is currently far more committed to free trade than the EU.
As a consequence I believe the trade deals we strike will be far more wide reaching and therefore far more beneficial.
The Japan deal was done quickly to ensure it was ready by the end of transition. I wouldn't be at all surprised to see it deepened considerably.
Trade deals with other countries should not affect our trade deal with the EU under level playing field clauses as we will have to declare country of origin on exports to EU for tariff purposes anyway.
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