Yahoo Finance 'All pain, no gain:' Brexit costs and red tape vex UK firms and shoppers
UK firms and customers are struggling with a wave of new paperwork and costs on goods sent to the European Union, and even Northern Ireland, as the economic fallout of Brexit continues to grow.
Prime minister Boris Johnson promised “certainty for business” and free trade under his last-minute Brexit deal agreed last month.
But reports of disruption to UK-EU trade are mounting by the day as firms, shoppers and even those posting gifts struggle with an avalanche of complex new trade rules.
Border chaos in Kent has been limited so far. But industry body Logistics UK said on Monday that delays were building at UK depots instead as drivers arrived to pick up loads where paperwork was not ready. Around a quarter of lorries headed from Britain to Ireland via Holyhead also lacked correct documents.
Last week saw Scottish seafood exporters warn trucks full of fresh produce were being held up by checks, IT problems and confusion, and DPD suspended UK deliveries to the EU as so many parcels similarly lacked the right information.
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Delivery firm UPS (UPS) also told Yahoo Finance UK it had suspended Standard delivery for agricultural and food packages subject to checks, such as fruit, vegetables and wooden items. The company’s guidance states customers have to pay for Express services instead.
Even the UK government admits “significant” cross-border disruption could worsen this week, as lower-than-average haulier numbers in Kent last week return to normal.
Yahoo Finance UK spoke to several firms and consumers about how the biggest shake-up in UK-EU trade in decades had affected them so far.
Relatives abroad face taxes on gifts sent from Britain
Eva Van-Steenberge‘s relatives in Belgium have a taste for Tunnock’s tea cakes and wafers.
As the products are hard to find where they live, she regularly posts them, alongside other gifts. “Especially during the pandemic, it’s been nice to keep in touch by sending over things I know will make them happy.”
But with Britain outside the EU’s VAT regime and customs union, relatives excited to open her gifts are likely to face a less welcome present — a bill for import VAT.
Her Belgian family face a 21% tax on the value of any of her gifts worth more than €22.
“It seems ludicrous one would need to go through so much trouble to send personal belongings or gifts,” said Van-Steenberge, who lives near Canterbury in south-east England.
She is also uncertain if food products and conserves from her allotment could face border safety checks. She even wonders if a home-made oven mitt would require “proof of origin” details to avoid tariffs.
Van-Steenberge said she had struggled to find accurate guidance online. “I’m scratching my head. I need to know what the formalities are.”
READ MORE: Brexit deal lets EU hit UK with unilateral tariffs
She approached UPS recently to ask about extra steps for non-commercial items, but was directed to the company’s commercial Brexit guidance.
It says traders need to provide commercial invoices, proof-of-origin statements, register for a government-provided “EORI” number, and use only its Express services for agri-food products subject to checks.
But she said advisers appeared “confused” as it then emerged she needs an invoice but not an EORI number.
She remains uncertain over proof-of-origin documents. “I’m going to send [the oven mitt], and I’ll soon find out. Certain material’s from Japan, some from the US, but I made it here. Where does it come from?
“It’s just proof in my daily life how ridiculous, confusing and poorly implemented Brexit really is.”
A UPS spokesman told Yahoo Finance UK it continued to “move the world forward by delivering what matters” and navigating the “regulatory complexities” of world trade for customers.
“As the world’s largest customs broker, we deliver value for our customers by helping them adjust their global supply chains to better manage cross-border risk,” he added.
Tray manufacturer: Extra bureaucracy is ‘crippling’
Kaymet is a small London-based manufacturer of trays, trolleys, hotplates and placemats, and counts leading British firms Fortnum & Mason, Harrods and John Lewis among its clients.
Around 40% of its sales are to the EU. Director Mark Brearley is one of many business chiefs frustrated by extra costs and worried about how to comply with new rules.
“We’re upset about the extra costs piling onto us, the time it’s consuming, and the huge amount of extra bureaucracy,” he said. “We’re a dozen people and have this extra stuff eat up days of time — it really hurts the business.”
Shipping costs have already soared more than 250% for the small batches of products his firm export to the EU compared to pre-Christmas prices, he said. “We assume they are recovering the cost of handling customs. Since we pass on shipping costs to customers, we’re worried it will put them off ordering.
“We might be forced to compensate by reducing prices; that would be a huge blow.”
READ MORE: Experts warn ‘Alice in Wonderland’ Brexit deal is unstable
The firm sent around 240 deliveries to the EU last year, and Brearley also fears having to prepare a certificate-of-origin document for all of them. “It would be a huge administrative burden. The cost and time delay would be crippling.”
Other hurdles include a Kaymet product which previously only needed the EU’s CE safety sign-off, but will also need to meet the new “UKCA” mark standards from 2022. The costs could stop Kaymet even selling it in the UK, according to Brearley.
“We’re really angry about how insulting it was we kept being asked to prepare, yet the people who’ve not prepared are the government,” he added. “We’d like compensation from government for the damage done and drain on resources. It’s all pain and no gain.”
Orders cancelled and products unavailable in Northern Ireland
Last week William Lambe was surprised to see an online eBay order cancelled the day after he made it.
The Belfast-based project manager and public speaker said he was told it couldn’t be delivered to Northern Ireland due to new Brexit rules. He said other orders had seen prices hiked to cover extra customs processes.
Lambe highlighted the disruption hitting supplies on supermarket shelves in Northern Ireland, as well as some medication supply chains.
“All of [it] is concerning. This is quite worrying when businesses don’t know the rules yet,” he said.
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Even small firms or individuals in Britain selling goods online to Northern Irish consumers face extra paperwork under the terms of Brexit agreements. They risk customs duties unless they join an official trader scheme, claim waivers, and declare their products are UK- or EU-made and won’t end up in the EU.
Elizabeth de Jong, policy director at Logistics UK, told a hearing of MPs on Monday there was a “lack of awareness in business that border-like administration is required for GB-NI, even though a border doesn’t officially exist.”
The UK government chose to accept
Democratic Unionist Party MP Sammy Wilson also told parliament this week English firms had written letters to thousands of people and firms in Northern Ireland saying they would no longer supply them with goods.
Asked by Wilson about his efforts to meet promises of “unfettered trade,” chancellor Rishi Sunak said he was “sorry to hear” of such examples and the government was monitoring for any issues. But he said goods “in aggregate continue to move smoothly.”
