I have read a lot this week about M&S and Debenhams taking stock off shelves and even closing stores temporarily due to the impact of the new import & export rules in the Withdrawal Agreement. I've yet to read anything about the effect on small retailers who are even less equipped to get back up again after what has amounted to yet another good kick-in.
I am sure that we all responded with relief to Johnson’s jubilant announcement of tariff free trade with the EU yet for many of us this couldn’t be further from the truth. Either he hadn’t bothered to read and analyse the small print or he chose to tell us what we wanted to hear rather than the truth. The fact is that we have been plunged into a horror story of complex rules and red tape which is going to reduce profit margins, cost us money to navigate (unlike M&S and Debenhams very few of us have in-house tax expertise) and is going to require us to magic up additional resource to manage on a day to day basis.
Let me explain how this is affecting Vinyl Revolution. We sell vinyl records and a range of art, clothing and home products featuring our own music themed designs. When we started setting up our supply chain for our own range of products our criteria was simple 1) we would buy British wherever possible 2) we would only buy products produced ethically and sustainably. We quickly realised that our first aim was almost impossible to meet as so few products are manufactured in the UK and even fewer are made sustainably. Most of our products are manufactured in EU countries (mostly Sweden, Belgium and Austria). Irrespective of where our products are originally manufactured they are imported into the UK where they are printed with our own designs and sold.
We no longer have a High Street presence and solely sell online. We have customers in 43 countries but over 80% are in the UK and EU. So what have these new rules meant for us? Firstly it means that we have to pay VAT on all overseas sales and jump through a whole host of bureaucratic export hoops which we are still battling to understand. Secondly it means that we have to complete immensely time consuming customs declarations for each overseas sale (yes even a sale for a single t-shirt) and include tax codes which are far less than straight forward and very difficult to search through due to the use of archaic vocabulary which appears to have been written by Jacob Rees-Mogg. Fancy selling a beer glass? Simple right? Well yes if you are looking for ‘Carboys, bottles, flasks, jars, pots, phials, ampoules and other containers, of glass, of a kind used for the conveyance or packing of goods; preserving jars of glass; stoppers, lids and other closures, of glass’. Tax code for a turntable slip mat anyone? I dare you to try to find it!
The good news for us is that most of Vinyl Revolution’s sales are under 500 euros in value which means that the dreaded Country of Origin classifications don’t apply but this won’t be the case for many small retailers (and will certainly complicate wholesale export for us). But should we be foolish enough to make a sale over 500 euros in value then we will enter a whole new World of hell. And this is where I get really angry because for the majority of UK exporters there is no such thing as tariff free trade. Country of Origin is not applied to where your product was printed, assembled or sold from, instead it applies to where its components originally came from. As the UK does not press vinyl records (apart from in a few independent micro presses) we have no choice but to buy records manufactured by the major labels in Asia, US or Eastern Europe. Because Sweden and Belgium do not grow cotton we have no choice but to buy from manufacturers whose cotton is grown in India or Pakistan. I could go on but you get my drift. How the hell are we supposed to sell products which can be exported tariff free? The short answer is that we can’t! And guess what happens when you sell products with components from outside of the UK? Yep you’ve guessed it – you get hit by a nice juicy tariff.
So the reason for this post? To let off steam? Yes a little. In the hope that enough of us speaking out will put pressure on the UK government to take responsibility for their actions and come up with a solution for this mess that they have got us into? Most certainly. But most importantly I would like to ask all of you to think about the small and independent retailers that you buy from (or could buy from) next time you are in the mood for shopping. Please keep buying from small UK retailers (they need your support now more than ever) and please be patient if delivery delays occur. They are as much of a victim of this as you are. I suspect that these problems are going to make buying from Amazon even more attractive. Their tax avoidance expertise is probably second to none and they will no doubt have hordes of experts on hand to smooth things along, but buying from Amazon is not going to keep UK citizens in employment or rescue the UK economy is it?
One last request – if I have made mistakes and exhibited a lack of understanding in this blog please go easy on me. I’m not a tax and customs expert and this is a bloody minefield!