Brexit and E-Commerce, update

Last month we published a post on the ongoing Brexit uncertainty, specifically its effect on e-commerce. We now have a few more answers as detailed information is becomes more readily available. Read on for our Brexit and E-Commerce update.

The latest on Brexit and E-Commerce

The good news is the the UK will maintain tariff free trade with the EU. The bad news is that companies who export to Europe will have more paperwork to do.

For e-commerce vendors, this will specifically impact their relationship with their delivery companies. For example, DPD have, at the time of writing, temporarily suspended their road service to Europe. This is due to problems with parcels which lack the correct documentation.

There are a number of hoops through which UK businesses must jump to ensure parcels are correctly documented. The e-commerce platform Shopify has compiled a guide to the consequences of Brexit on e-commerce. It’s worth reading this, other similar professional guides, and the official UK government guidance on this subject. It may also be worth taking professional advice where appropriate.

Summary of points to consider

Meantime, we’ll summarise the key points here where they appear to apply to UK vendors.

  1. Check tax settings – make sure your web store’s tax settings are configured correctly for EU sales.
  2. Get ready for customs – it looks like UK vendors selling to Europe may need an Economic Operator Registration and Identification (EORI) number for both UK and Europe.
  3. Understand how to prepare customs declarations – among other information, UK vendors will need their EORI number, VAT ID, and full details of the goods, their value and the VAT charged in the shipment.
  4. Review shipping options – decide how any potential customs fees incurred during delivery should be handled, e.g. the vendor pays or the client pays.
  5. Update shipping, returns and refund policies – understand how the payment of customs fees affects these policies and how this impacts returns and refunds

Additionally, check with your courier or delivery company on their policies. Ask how they propose to handle customs fees, and any other requirements they now impose.  For example, some delivery companies already pay the customs fees to the relevant tax authority on import. This is then recouped this as an extra, and potentially unexpected, charge to the customer, to be collected before delivery is completed.  Our view is that this leads to a bad customer experience that can hamper repeat business. It would therefore be essential to understand how this may affect the shipping methods your business uses.

Further Reading

 

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