Right now the only thing we know about what’s happening with Brexit is that we don’t know anything. It’s frustrating for everyone. We’re as organised as we can be – which is mainly working out what we’d do in multiple what if scenarios. There’s a general election in the UK on 12th of December which may clarify things, or which may leave us in as much of a muddle as we are now.
What we can talk about is how we’re planning to deal with leaving the EU if or when that happens. This mainly applies to customers in the EU but not the UK. Let’s cover UK and non EU customers first.
If you are in the UK then there won’t suddenly be any extra charges involved in getting your parcel to you. It isn’t leaving the UK. If you pay for the full year of clubs in advance or choose to be invoiced for each payment then your price is fixed for 2020.
If you live outside the EU then you already get VAT exclusive prices when you shop with us. Again that won’t change. We’ll still fill in a customs form for your parcel and it will still go through customs. Again your prices for 2020 will be fixed.
Then onto the trickier bit – customers in the EU but outside the UK.
We’re a VAT (value added tax) registered company, so if we sell goods in the UK and EU the price charges includes VAT at 20%. That means that yarn which costs £12 includes £2 VAT. We then need to account for that VAT and pay it to HMRC (the tax people) every quarter (less the VAT we’ve paid on goods we’ve bought)
If we send goods outside the EU then we don’t charge VAT on them and we don’t have to pay VAT on those sales to HMRC. It makes goods cheaper for customers in non EU countries.
If and when we leave the EU then we will no longer charge VAT on orders going to the EU. That means lower prices for EU customers. In theory that sounds like it could be fine. However it’s not quite that simple.
One benefit of being part of the EU is that goods we send to other parts of the EU don’t go through customs. This saves time. It also means that the price a customer pays for their parcel is the final price as there are no further taxes and charges to pay.
If and when we leave the EU we think that all goods going to the EU will have to go through customs. That slows post down (and short term those delays could be lengthy because there will be a lot more volume to deal with). There’s the additional cost for items which are above the VAT and/or customs duty threshold. Until I started looking at this I expected that the limit would be the same across the EU, but it isn’t. VAT rates also vary. So there’s no simple answer to how much it will cost to get a parcel from the UK to another EU country.
Unfortunately parcels above the VAT threshold don’t just have VAT added back on. There are handling fees, and possibly customs duty too for larger parcels (I’m mainly finding limits of EUR150 for customs duty)
What we can’t do is lie on the customs label. It’s worth mentioning this as we get asked to do this at least a couple of times a week.
So for our EU customers we’re going to open the clubs up as usual. Prices will include VAT as we need to charge that while we remain part of the EU. However if we leave the EU we’ll cancel any outstanding part of your order before we leave and refund you (so the refund will include the VAT you paid), then invoice you with a VAT free price after we leave the EU. If your order falls above the threshold for charges and you want to cancel we’ll make sure that happens for you.
It’s also possible that the UK will leave the EU between someone paying for a club parcel and it arriving. We’re very much hoping that there will be a period of notice so we can send club parcels before the deadline (just like we did this year to make sure we’d cleared parcels before the 31st October deadline). But – worst case scenario – we’d refund customs charges made on orders which were in transit during the withdrawal period. This isn’t a general offer to refund customs charges and would apply to orders made and posted while the UK was still in the EU and which attracted charges as the UK had left the EU before the parcel reached its EU destination.
It’s a mess. I’m furious for every single business that’s trying to work its way through what we need to be doing to keep things running smoothly. I’m angry that we’re expected to put plans on hold because we don’t know what’s coming. We’re as organised as we can be for whatever is coming. We’ve bought and paid for the yarn and dyes which will be used for the 2020 clubs. So we’re all set.
Tomorrow we’ll launch the clubs and I’m looking forward to telling you what we have planned. I have a feeling that some warm comforting wool might be high on my list of essentials in the coming weeks and months.