150,000 British sellers on Amazon and other online marketplaces hit by Brexit charges
Awesome Books isn’t finding Brexit very awesome.
Last year, the online retailer dispatched £4 million of new and used books to customers in every member state of the European Union from its warehouse near Oxford.
This year, the company is having to charge buyers in the EU between 15 and 20% more to cover the costs of new customs rules and paperwork. It is losing sales as a result.
“[Putting up prices] is a very big deal,” said Mobin Ahmed, Awesome’s sales director.
“Competition online is ferocious. When you go and find a book you tend to look at price. If it’s 50p or £1 difference then it makes a big difference. Why pay more when you can pay less?”
Awesome Books’ business has been damaged by Brexit and it is not alone.
All UK exporters to the EU - including those who trade on platforms like Amazon and eBay - now have to contend with customs declarations and, in many cases, VAT registrations and tariffs.
Avalara, a tax advisory service, estimates that around 150,000 UK businesses that sell on online marketplaces have been hit with higher costs.
“It’s the small businesses that are trading on big marketsplaces - like Amazon and eBay - that are hit the hardest,” Avalara's vice president of global tax, Richard Asquith told ITV News.
“They're the ones having to cope with extra paperwork and taxes and they are just not set up for it. They are losing business to their European competitors.” Before Brexit, small e-commerce companies were allowed to sell to 450 million EU consumers using their UK VAT number. That has now changed.Avalara calculates that around 27,000 of them will now have to register for VAT in each EU country they sell into at an average cost of £28,800 a year or stop exporting.
“You can imagine challenges this entails,” Asquith said.
“The language, the costs, getting a local agent. For many UK companies it will prove too cumbersome, too time-consuming and too costly.”
Brexit has cost Kiddimax, an online retailer in Blackpool, around one-third of its sales.
The company exported £600,000 of toys to France, Italy, Spain and Germany last year but most of the toys are made in China and many now attract tariffs when sent to the EU.
Tax expert Richard Asquith from Avalara says UK online retailers have been hit by two “wrecking balls” in the form of VAT registration and tariff charges
Kiddimax has had to put up their prices and sales have slowed. In France, sales in the first 10 days of January were down 90% on the same period of 2020.
“Everything over €20 has stopped selling,” says Andy Tauber, who set the company up twelve years ago.
“I’m a little annoyed, I’ve got mixed emotions. You start worrying but at the end of the day you’ve got to push onwards and find a way around it, it’s all you can do. I’m not letting any of my eight staff go”.
A government spokesperson said: “Now the UK has left the EU customs union and single market, there are new rules and processes businesses will need to follow.
“We have encouraged companies new to dealing with customs declarations to appoint a specialist to deal with import and export declarations on their behalf - and we made over £80 million available to expand the capacity of the customs agents market.
“The government will continue to work closely with businesses to ensure they are able to trade effectively under the new rules.”
The government admits businesses are experiencing "teething problems" but the paperwork is here to stay and so are the extra costs and - with them - the higher prices.