A small and sad announcement update for our British customers.
Two days ago we were forced to lock out retail shipping to UK addresses, due to new post-Brexit policies of British Revenue Office. We did it with heavy heart, and we hope it is only temporary, but the situation is so chaotic at the moment, that even our accountant, after 2 weeks of research is unable to explain to us how we should proceed.
Here is what we know, and it is not much.
Starting January 1st, Great Britain introduced a new policy for foreign retailers. For most countries of the world, be it EU, USA, Canada, Australia, Singapore, even Brazil, the situation is pretty straightforward. Retail customer purchases product at agreed retail (gross price), the seller pays all taxes from this transaction (like VAT, income tax etc), domestically, the product is shipped, goes through customs procedures and can be picked up at receiver’s end. Sometimes there are some import customs fees on receiver’s end, but those vary, depending on trade agreements and local regulations.
If import fees would be the only problem with post-Brexit UK shipping it wouldn’t be a problem at all for us, a perhaps additional burden for the buyer. But the British revenue office has decided to do something rather radical. VAT tax, a standard for EU countries, remained as a part of the British revenue system as well. And now they require from international sellers to pay VAT (20% of the net retail price) tax in the UK. It means that every company that wants to sell retail to the UK must register there, and, for every transaction, they are required to pay part of their taxes in the UK.
This causes, of course, additional headaches for accountants all over the world, who need to learn British tax regulations, split taxes from every transaction into two pools (domestic and the UK) and, most importantly, they are not even sure if such procedures have ground in, say, Polish tax laws to which we adhere.
Another problem, and a big one too, are the customs clearance fees that seller must pay to clear taxes on the export side. We are used to this, but in B2B, wholesale dealings, not retail. Basically, in B2B business customer pays the only net price, about 83% of the gross price, we clear VAT at customs, and then the customer pays his own local VAT (if applicable) in their destination. If that would be the case for retail, we could simply make a special net price only for UK citizens, who would pay VAT domestically. But to do that, lots of laws would have to change in both countries. Problem is, documentation and checkout procedures cost about 30 GBP per parcel, and require lots of extra work to fill declarations etc. So, given that many of the retail purchases from the UK are below 30 GBP, paying 30 on top of every order from our side is impossible. Transferring it onto customer also wouldn’t be fair…
If you made it that far reading this, you are probably confused, and so are we.
There are few possibilities we are researching at the moment, to ensure future distribution of our products in UK.
1) Procedures from UK side will be streamlined, some additional agreements will be signed on government level between countries. Currently, we don’t even know how to properly register in UK tax revenue, in accordance with Polish law at the same time.
2) Retailer in the UK, purchasing in B2B formula and establishing internal retail distribution. Currently, Robey Jenkins and Precinct Omega hold dealership of our minis in the UK, so until re-stock, this is your only chance to get them.
3) Han Solo……..
Option no 2 is the most probable so far. Until then, unfortunately, we will not process retail orders from UK addresses.