Problems in the first few days since Brexit are the “tip of the iceberg”, according to cross-border e-commerce trade specialist Hurricane Commerce, with the company noting that the issues caused by lack of complete and valid customs data, and VAT now being payable on low-value goods into the UK, will cause severe challenges over the coming days and weeks.
The company highlights that last week, DPD temporarily suspended parcel deliveries to the EU due to a lack of data, stating that 20% of items had incorrect or incomplete information. Additionally, several UK online retailers, including luxury food merchant Fortnum & Mason, have temporarily stopped taking orders from EU countries due to the extra customs paperwork that is needed now. Furthermore, some EU retailers have ceased taking UK orders following the January 1 change that makes overseas suppliers that send parcels to the UK containing goods valued at £135 (US$183) or less responsible for paying any import VAT that is due.
The company also points out that customer satisfaction has been put under increased strain with consumers in the EU complaining about unexpected VAT charges and clearance fees, and UK consumers being asked to pay higher delivery charges to cover the extra work caused by Brexit.
Another major hurdle resulting from the Brexit trade deal concerns ‘rules of origin’ with the threat of tariffs due if goods do not meet the complex requirements or are not wholly made in either the UK or EU.
Martin Palmer, Hurricane’s chief content and compliance officer, commented, “Online merchants and marketplaces, postal operators and carriers are starting to see the reality of Brexit and the ending of VAT exemption on low-value goods by the UK government.
“With the EU also removing the low-value VAT threshold in July, the compliance pressures on all parts of the cross-border supply chain are set to intensify even further with similar issues to be experienced in all EU countries to those current being experienced in the UK. The first week and a half since Brexit is just the tip of the iceberg.
“We predicted for the last six months of 2020 that many businesses were going to face serious challenges post-January 1, while others did their planning and put the best possible systems in place. There is simply no escape from the need for complete and valid customs clearance data including product descriptions, HS6 codes, shipper and consignee details and country of origin.
“Retailers which offer Delivered Duty Paid (DDP) give themselves the best chance of keeping their customers happy by avoiding the doorstep shock of unexpected fees for customs duties and import taxes.”