If British citizens find fault with their government’s tax system — in this case, with how onerous it is for foreign businesses to setup UK VAT accounts — then they can exert political pressure for change on their MP, travel to their capital to make representation / protest, or even, with politics at its most red in tooth and claw, vote for a completely new government.
The linked Twitter thread points to how much better run the EU system is. Were remainers ceding tax authority to the EU because the EU is more competent?
Sometimes the pro-EU movement’s most promising (if passive) argument is that the EU runs things much better than the UK, so let’s just give all the power to Brussels instead.
The problem with VAT is that a lot of UK companies somehow forgot brexit happened, and that means different VAT handling. Well, among other problems, too.
No one knew what the new rules would be until the 24th of December. Yes companies probably should have prepared a suite of options they could switch to. But there was always the chance, and probably the reality that whatever they prepared would be wrong.
The case I've heard regarding british exports to EU involved something that could be relatively easy to get, as it was known that UK would be out of common VAT and customs union at the time, and is mostly related to personnel mistakenly continuing to issue invoices "business as usual".
Now, the import VAT situation is totally bonkers, and I'm really dismayed about how it's apparently going to hit us in EU too in June (media didn't give a peep about that one)
>Sometimes the pro-EU movement’s most promising (if passive) argument was that the EU runs things much better than the UK, so let’s just give all the power to Brussels instead.
I think, no one argues that the EU runs things better in principle. The argument is that having to deal with a single set of rules is superior to having to so with multiple different ones (which to some degree is the current status within the EU too).
How those rules are executed is orthogonal to it, and I would say that most proponents of the EU will agree, that there is room for improvement, as you surely will with how things are run in the UK.
The power is not simply given to Brussels, your government has in most cases a veto. And depending on how your parliament has set up the checks and balances with your government, the agreements are subject to your parliaments approval.
In other cases it has go through EU parliament, and you can lobby your MEP.
So, in essence, it is not some anonymous thing in Brussel doing things, it is your government and your MEP to whom you can direct your complaints. In most cases though likely the very same government you still have to content with.
Also, the "unelected bureacrats", with exception of EU civil service, are the Council of the European Union (EDIT: thank klelatti for correction) - which is formed of Ministers and Heads of State of all members.
Quite. The European Commission generally consists of people who have lost an election in a member state, and have had to find something else to do... :-)
You may very well think that, but I could not possibly comment ;)
Of course the criticism of the Commission is that it does more than 'just' implement policy. I think that's fair criticism but probably inevitable given it has to co-ordinate 27 member states.
The European commissioners are suggested by the governments of the members states. Lobby your local state government if you are not happy about their choice of commisioner.
You're going to be down voted here on HN, sorry in advance.
Wrongly or rightly (we'll see), Brexit was about control. The UK having such control allows them to more easily adapt to their unique local situation, and by extension to external agents.
> The linked Twitter thread points to how much better run
> the EU system is.
A few days in and people are already claiming it was a mistake (big surprise) - really not long enough to see the results of anything. My guess is that we'll have a good idea in the next 6 months, once the paperwork is really rolled out and businesses have a better idea of what to expect, the markets should be settled.
> Were remainders ceding tax authority to the EU because
> they were more competent?
This is what I find crazy. In fact, it is well documented that most Countries are well under their projected targets [1]. Germany seems to be the only real winner.
That link's about the Euro which is a separate (but related) debate from the wider EU point. The impact of the Euro on different member states is well understood and predicted.
> That link's about the Euro which is a separate (but
> related) debate from the wider EU point.
Good point, but almost every (or now every?) Country in the EU uses the Euro? I don't know how you could separate the effect of the currency and Union itself?
Denmark has a permanent opt-out and Sweden, Poland etc haven't adopted yet and no timetable.
I'm not an economist but I think at the highest level the impact of the Euro (devaluing their currency helps big exporters like Germany) are reasonably well understood and predicted.
The impact of being in the EU (ex Euro) is a bit more difficult to quantify (see UK referendum) apart from the net payments (Germany pays in, UK paid in, Poland, Czech Rep etc receives). I don't think these payments are linked in any way to the Euro.
I think that you can consider the Remain / Leave argument in the abstract as being a debate between:
1. Ability to change rules more rapidly and in a way that better suits local conditions.
2. Greater interntational cooperation and coordination.
The problem is that although 1. sounds like an unadulterated benefit it isn't always. It's more likely to result in rules that swing rapidly between approaches (as government changes especially in a system like the UK's) and also probably more susceptible to regulatory capture.
So it's not really abour 'running better' - it's about stability at the expense of a degree of responsiveness.
It's both remarkable and entirely unsurprising how poorly the transition has been handled by the government. Regardless of the longer term impact of the deal or its positives/negatives, it's a mess currently.
The mess could have been at least reduced or perhaps avoided entirely had a deal been agreed earlier in the year, affording businesses trading to/from UK to actually have time to understand and respond to the new processes.
That's because at every turn short-term political calculus and keeping the rabid British right-wing press onside took precedence over trifling matters like the country's economy.
Most of these companies are temporarily suspending shipping to the UK for VAT/customs reasons. But shipping to the UK from outside the EU has always incurred the exact same customs/VAT charges. There are no new tariffs being introduced between the EU and the UK either, so none of the costs there change either. Although you will have to ship with specific providers to make the customs declarations go through easily.
I’m not sure that the customs changes are significant enough to warrant this reaction, and I suspect most companies on this list are just pausing to make sure they don’t have issues in the short term.
The freedom of people movement changes are much more concerning though.
Is this entirely true? Isn't the UK now trading with Europe at World Trade Organization tariffs? Or was a better deal made? The EU has trading agreements with a significant part of the world. See this map for example: https://trade.ec.europa.eu/doclib/docs/2020/december/tradoc_.... If the UK is now trading at WTO rules they would be worse off than all those countries that have an agreement. Eyeballing that chart about 50% of the world would have an easier route to trade with the EU than the UK.
Apparently the VAT changes apply to everyone and are quite problematic.
To give a bit of context for those who didn't handle this kind of thing by themselves: VAT used to be handled as part of customs check. In practice that meant that if you were selling to UK (or other EU country) from outside customs union, you'd send your shipment as usual and only attach declaration of contents, and the buyer (importer) would pay VAT and necessary customs fees if applicable.
The new regime apparently requires the seller to setup VAT registration in UK, properly process VAT on their side, then transfer it to HMRC (UK tax agency).
This is a HUGE difference and big burden to both exporters and importers. Yes, importers now don't need to handle VAT - but they are still on the hook for customs fees, and now they have to worry not just about "did the other side file customs declaration right", something moderately easy to fix when it goes bad, but have to deal with "we can't import unless the seller effectively set ups half a company in UK"
> The freedom of people movement changes are much more concerning though.
I'm keeping an eye out for the first "person who has lived in the UK blamelessly for more than a decade is deported" story. I'm also wondering how patchily the parcel enforcement is going to apply to aliexpress and friends.
The biggest change is that now the person shipping (or a marketplace if they use it) has to be VAT-registered and pay VAT directly to the government, rather than it be handled by the courier/shipping service who would collect it directly from the recipient before releasing the package to them. I think it's a pretty significant change to how third countries work, especially if they only occasionally ship to the UK.
The EU are adopting the same rules in July, and I'm not sure why we didn't harmonise the introduction date with the EU.
I don't think that's true. Before VAT was charged at customs, but I believe now, VAT has to be charged at the point of sale, meaning any non-UK websites selling to the UK have to update their websites and associated logistics
It would seem that the effort required should scale with the number of goods sent to the UK. For example:
* If your company ships under $1000 of goods to the UK per year, you don't need to keep any records or pay tax. Just write your name on the parcel.
* If you ship under $100,000 to the UK per year, you must pay 20% tax on imports, by annual cheque to "The Queen". You calculate the amount.
* If you import more than that, you need to register with the government, keep records of sales, allow our auditors to look at them, pay monthly in advance, etc.
You might say that, but in reality it used to be a per-parcel threshold (£15? maybe) which is now being reduced to zero.
(I'm old enough to remember when companies including Amazon shipped CDs from Jersey/Guernsey to the UK, since they were outside the EU but not "foreign" for the UK. https://www.independent.co.uk/money/spend-save/cheap-cds-and... (2005). The UK retains its collection of Annoying Edge Case Islands. A hilarious side effect of the deal is that the extremely British island of Gibraltar is now in Schengen!)
It can't easily be done "per company" because it has to be a process applied by customs to each parcel individually as it enters the country.
This is, after all, what all the "taking back control of our borders" stuff meant: more forms.
VAT threshold is 135 GBP per parcel, and you're on the hook for full VAT handling plus whatever time it takes probably overburdened (thanks to stupid decisions by politicians) civil service to register you plus all the setup and training to handle VAT on your side.
Also consider that the onus is on the exporter, not importer now. Which also means trouble for importer as they have possible issue of "our supplier doesn't have the VAT handling done, we don't have any viable alternative"
I have done VAT calculations, they are elementary and the whole registration and submission process is automated. Lets not add imaginary greciences to the real ones - this whole thing would be easilly handled by any sales platform like ebay/amazon/aliexpress
For "Online Market Places" there's separate registration category where they will handle VAT on behalf of the sellers.
However, they aren't the only thing, and I don't know about you, I do not enjoy teaching taxes to remote supplier, even if they speak perfect english (which is not given, not like I speak perfectly either.)
Seems simple enough to simply require either the buyer, or the seller, or the importer, or any stranger to pay the VAT.
Simply have some kind of QR code which is issued by the government and stuck onto the package representing the VAT paid. Anyone can log into a government website to pay moneys and get a code. Have an API for companies to self-issue codes too.
If anything arrives at the border without the code affixed, someones gotta pay the taxes before the goods are released.
It's awfully similar to a system existing in postage for centuries... Stamps!
Arguably the present system was easy, and adding optional "VAT stamp" for companies that handled VAT on seller side would have been easy... but it's not how things happen.
If your item is below £135, you have to pay VAT at the point of sale. Above £135 and the VAT is collected at customs (maybe optionally at point of sale too? This part is unclear)
as I understand so far, the new regs are as follow:
price <135 GBP = VAT exempt for import
price >135 GBP = VAT has to be collected by point of sale and handled there.
The main difference is that previously, above 135 GBP you paid VAT as part of customs process, on importer side. Now you will have to worry about their VAT registration etc.
From what I understand, tax on goods below £135 is still to be paid but at POS
"For imports of goods from outside the UK in consignments not exceeding £135 in value (which aligns with the threshold for customs duty liability), we will be moving the point at which VAT is collected from the point of importation to the point of sale. This will mean that UK supply VAT, rather than import VAT, will be due on these consignments."
"For most consignments not exceeding £135 in value, instead of VAT being collected at importation or delivery to the customer, VAT will be accounted for at the point of sale."
I swear someone took a class in how to write a misleading information package there, because they later claim about goods under 135 GBP being free from VAT... import VAT.
Because two section above they put it under supply VAT.
Much of this (as admitted in the tweet thread) is due to the VAT changes, I don't think it is wise to blame this on Brexit and move on as it ignores the growing problem. The only connection Brexit has to this is timing, these VAT changes are EU wide and will rolled out to EU member states this year. Foreign companies will need to charge VAT at the member states rate (some have multiple) and register for VAT in the EU.
After the EU other countries will follow suit wanting their slice of the pie, if you don't believe me have a look at global sales tax handling for digital sales ([0] quick example). Trying to stay above board here is difficult, there is investment to be made in charging the correct taxes in the first place but the main problem is the massive amount of potential paperwork in filing all the taxes. As will be the case for many retailers we simply don't sell to any country which requires us to charge tax and has no sales threshold.
This is a big problem for small business, in an age where anyone can start a niche business and scrape a customer base together from the entire world they will be killed by paperwork...
A good number appear to be straight-up logistics; there's a worrying number of "and Ireland", where the only issue shipping to Ireland from the continental EU is the physical logistics of the UK "land-bridge".
43 comments
[ 3.2 ms ] story [ 28.5 ms ] threadThe linked Twitter thread points to how much better run the EU system is. Were remainers ceding tax authority to the EU because the EU is more competent?
Sometimes the pro-EU movement’s most promising (if passive) argument is that the EU runs things much better than the UK, so let’s just give all the power to Brussels instead.
Now, the import VAT situation is totally bonkers, and I'm really dismayed about how it's apparently going to hit us in EU too in June (media didn't give a peep about that one)
I think, no one argues that the EU runs things better in principle. The argument is that having to deal with a single set of rules is superior to having to so with multiple different ones (which to some degree is the current status within the EU too). How those rules are executed is orthogonal to it, and I would say that most proponents of the EU will agree, that there is room for improvement, as you surely will with how things are run in the UK.
The power is not simply given to Brussels, your government has in most cases a veto. And depending on how your parliament has set up the checks and balances with your government, the agreements are subject to your parliaments approval.
In other cases it has go through EU parliament, and you can lobby your MEP.
So, in essence, it is not some anonymous thing in Brussel doing things, it is your government and your MEP to whom you can direct your complaints. In most cases though likely the very same government you still have to content with.
https://europa.eu/european-union/about-eu/institutions-bodie...
Of course the criticism of the Commission is that it does more than 'just' implement policy. I think that's fair criticism but probably inevitable given it has to co-ordinate 27 member states.
https://www.europarl.europa.eu/hearings-2014/en
Wrongly or rightly (we'll see), Brexit was about control. The UK having such control allows them to more easily adapt to their unique local situation, and by extension to external agents.
> The linked Twitter thread points to how much better run
> the EU system is.
A few days in and people are already claiming it was a mistake (big surprise) - really not long enough to see the results of anything. My guess is that we'll have a good idea in the next 6 months, once the paperwork is really rolled out and businesses have a better idea of what to expect, the markets should be settled.
> Were remainders ceding tax authority to the EU because
> they were more competent?
This is what I find crazy. In fact, it is well documented that most Countries are well under their projected targets [1]. Germany seems to be the only real winner.
[1] https://www.cep.eu/fileadmin/user_upload/cep.eu/Studien/20_J...
> related) debate from the wider EU point.
Good point, but almost every (or now every?) Country in the EU uses the Euro? I don't know how you could separate the effect of the currency and Union itself?
I'm not an economist but I think at the highest level the impact of the Euro (devaluing their currency helps big exporters like Germany) are reasonably well understood and predicted.
The impact of being in the EU (ex Euro) is a bit more difficult to quantify (see UK referendum) apart from the net payments (Germany pays in, UK paid in, Poland, Czech Rep etc receives). I don't think these payments are linked in any way to the Euro.
1. Ability to change rules more rapidly and in a way that better suits local conditions.
2. Greater interntational cooperation and coordination.
The problem is that although 1. sounds like an unadulterated benefit it isn't always. It's more likely to result in rules that swing rapidly between approaches (as government changes especially in a system like the UK's) and also probably more susceptible to regulatory capture.
So it's not really abour 'running better' - it's about stability at the expense of a degree of responsiveness.
The mess could have been at least reduced or perhaps avoided entirely had a deal been agreed earlier in the year, affording businesses trading to/from UK to actually have time to understand and respond to the new processes.
I’m not sure that the customs changes are significant enough to warrant this reaction, and I suspect most companies on this list are just pausing to make sure they don’t have issues in the short term.
The freedom of people movement changes are much more concerning though.
To give a bit of context for those who didn't handle this kind of thing by themselves: VAT used to be handled as part of customs check. In practice that meant that if you were selling to UK (or other EU country) from outside customs union, you'd send your shipment as usual and only attach declaration of contents, and the buyer (importer) would pay VAT and necessary customs fees if applicable.
The new regime apparently requires the seller to setup VAT registration in UK, properly process VAT on their side, then transfer it to HMRC (UK tax agency).
This is a HUGE difference and big burden to both exporters and importers. Yes, importers now don't need to handle VAT - but they are still on the hook for customs fees, and now they have to worry not just about "did the other side file customs declaration right", something moderately easy to fix when it goes bad, but have to deal with "we can't import unless the seller effectively set ups half a company in UK"
I'm keeping an eye out for the first "person who has lived in the UK blamelessly for more than a decade is deported" story. I'm also wondering how patchily the parcel enforcement is going to apply to aliexpress and friends.
The EU are adopting the same rules in July, and I'm not sure why we didn't harmonise the introduction date with the EU.
It would seem that the effort required should scale with the number of goods sent to the UK. For example:
* If your company ships under $1000 of goods to the UK per year, you don't need to keep any records or pay tax. Just write your name on the parcel.
* If you ship under $100,000 to the UK per year, you must pay 20% tax on imports, by annual cheque to "The Queen". You calculate the amount.
* If you import more than that, you need to register with the government, keep records of sales, allow our auditors to look at them, pay monthly in advance, etc.
(I'm old enough to remember when companies including Amazon shipped CDs from Jersey/Guernsey to the UK, since they were outside the EU but not "foreign" for the UK. https://www.independent.co.uk/money/spend-save/cheap-cds-and... (2005). The UK retains its collection of Annoying Edge Case Islands. A hilarious side effect of the deal is that the extremely British island of Gibraltar is now in Schengen!)
It can't easily be done "per company" because it has to be a process applied by customs to each parcel individually as it enters the country.
This is, after all, what all the "taking back control of our borders" stuff meant: more forms.
Also consider that the onus is on the exporter, not importer now. Which also means trouble for importer as they have possible issue of "our supplier doesn't have the VAT handling done, we don't have any viable alternative"
However, they aren't the only thing, and I don't know about you, I do not enjoy teaching taxes to remote supplier, even if they speak perfect english (which is not given, not like I speak perfectly either.)
Simply have some kind of QR code which is issued by the government and stuck onto the package representing the VAT paid. Anyone can log into a government website to pay moneys and get a code. Have an API for companies to self-issue codes too.
If anything arrives at the border without the code affixed, someones gotta pay the taxes before the goods are released.
It's awfully similar to a system existing in postage for centuries... Stamps!
If your item is below £135, you have to pay VAT at the point of sale. Above £135 and the VAT is collected at customs (maybe optionally at point of sale too? This part is unclear)
price <135 GBP = VAT exempt for import price >135 GBP = VAT has to be collected by point of sale and handled there.
The main difference is that previously, above 135 GBP you paid VAT as part of customs process, on importer side. Now you will have to worry about their VAT registration etc.
From what I understand, tax on goods below £135 is still to be paid but at POS
"For imports of goods from outside the UK in consignments not exceeding £135 in value (which aligns with the threshold for customs duty liability), we will be moving the point at which VAT is collected from the point of importation to the point of sale. This will mean that UK supply VAT, rather than import VAT, will be due on these consignments."
"For most consignments not exceeding £135 in value, instead of VAT being collected at importation or delivery to the customer, VAT will be accounted for at the point of sale."
Because two section above they put it under supply VAT.
(Yes seriously William Shatner's company has stopped selling to the UK).
https://yorkshirebylines.co.uk/brexit-to-boldly-go-where-no-...
After the EU other countries will follow suit wanting their slice of the pie, if you don't believe me have a look at global sales tax handling for digital sales ([0] quick example). Trying to stay above board here is difficult, there is investment to be made in charging the correct taxes in the first place but the main problem is the massive amount of potential paperwork in filing all the taxes. As will be the case for many retailers we simply don't sell to any country which requires us to charge tax and has no sales threshold.
This is a big problem for small business, in an age where anyone can start a niche business and scrape a customer base together from the entire world they will be killed by paperwork...
[0] https://quaderno.io/blog/digital-taxes-around-world-know-new...