Brexit: Expert discusses UK’s ‘major advantages’ in trade
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From July 1, customers will have to pay import charges on all goods entering Germany from countries outside of the continental trading bloc, following a plan from Brussels aimed at coming down hard on VAT fraud. But the move from Germany has added more fuel to the fire between the UK and European Union as post-Brexit tensions continue to intensify following Britain’s full and completed departure from the bloc on December 31. A UK-based SME selling music records has compared Brexit to “death by 1,000 cuts” because of the increasing number of restrictions they are continually faced with, and warned their trade with the EU is already plummeting.
The record seller told freight and logistics industry news website The Loadstar: “It leaves me in a Brexit limbo right now, where I am continuing to sell stuff direct, but only low-value, under €22.
“And it is now beginning to affect our sales, with the percentage of trade with the EU dropping from 25 percent to 17 percent.”
The SME believes conducting businesses through the likes of eBay and Amazon could cut through much of the Brexit trading red tape they are struggling with and offer a more straightforward route to market.
But the record seller warned this could also see costs surge.
Brexit news: Germany introduces tough new rules on U (Image: GETTY)
Brexit news: The VAT move from Germany has been attacked by small businesses in the UK (Image: GETTY)
James Sibley, head of international affairs at the Federation of Small Businesses, is hopeful the £20 million SME Brexit Support Fund could help avoid some of the financial and trading issues.
The SME Brexit Support Fund provides firms with £2,000 to help with training or professional advice if the business has up to 500 employees and no more than £100million annual turnover.
Mr Sibley is calling for UK and EU ministers to work together to minimise and trade barriers for smaller firms, warning the new VAT exemption “will hit a lot of firms hard”.
He told The Loadstar: “What we really need to see is policymakers on both sides of the Channel doing their utmost to minimise additional tariff and non-tariff barriers for the smallest firms as we try to get the global economy back on track.
Brexit news: Tensions between the UK and EU have intensified over recent weeks (Image: GETTY)
“Fundamentally though, firms are struggling with the new requirements that have arisen because of the EU-UK trade deal and ending the VAT exemption will hit a lot of firms hard.”
International courier DHL has warned customers of the upcoming VAT exemption changes but added some exceptions would remain in place.
The company, which delivers over 1.5billion parcels each year, said: “Customers will not have to pay import duties if the goods were ordered from an online marketplace already registered in the EU and pays the VAT due in an EU country (the so-called import one-stop shop solution (IOSS).
“If the value of the goods is so low that import VAT due is less than €1 – meaning the goods are worth no more than €5.23 – customs will waive the charges.”
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Brexit news: The UK and EU signed a trade deal at the end of last year (Image: GETTY)
Brexit news: The value of imports coming into the UK from EU member states has plummeted (Image: GETTY)
DHL added for customers who fail to pay import charges in advance, it would pay these charges before collecting them from the recipient on delivery when it is picked up at a retail outlet, in addition to a VAT customs clearance fee of at least €6 also included.
The latest post-Brexit change comes after the latest figures from the Office of National Statistics (ONS) showed the value of goods imported from the EU has plunged.
In March 2019, imports from the remaining 27 EU member states totalled £25.2billion, compared with £17.8billion for the rest of the world.
But this year, EU imports have plummeted by nearly 30 percent to £18.9billion, while non-EU imports increased slightly by 2.1 percent to £19.3billion.
Brexit news: The key moments that led to the UK’s departure from the EU (Image: EXPRESS)
This first time the latter has outstripped the former since records began.
In a further blow for Brussels following Brexit, the figures, shared by Facts4EU, also reveals a huge year-on-year drop in the value of imports from the EU27.
During the first three months of 2019, more than half (55.9 percent) of all good imported into the UK came from the bloc’s 27 remaining member states.
But that has started to dip since then, to 52.9 percent in the same period last year and to 48.7 percent during the three month period in 2021.