Brexit: Boss of English shoemakers Tricker's says red tape will cost firm an extra £100,000 a year

Boss of 192-year old luxury English shoemakers Tricker’s says Brexit red tape will cost firm an extra GBP100,000 a year on exports to Europe

  • Tricker’s in Northampton said Brexit red tape will cost extra GBP100k per year
  • Shoemaker has found that paying VAT has now become more complicated
  • British exporters must comply with different rates across EU’s member states 

By Jack Wright For Mailonline

Published: 13:28, 26 January 2021 | Updated: 16:07, 26 January 2021

The boss of a 192-year-old luxury shoemaker says Brexit red tape will cost the firm an extra GBP100,000 a year on exports to Europe. 

Tricker’s managing director Martin Mason said invoices are mounting from parcel firms that ship the English company’s heavy GBP450 brogue shoes and boots to EU customers.

Though a last-gasp trade deal between London and Brussels averted a no-deal scenario and the big barrier of border tariffs, Tricker’s is finding that paying VAT has become a lot more complicated for direct sales to consumers.  

British exporters must now comply with different VAT rates across the bloc’s 27 member states.

Tricker’s, whose shoes are worn by Prince Charles, has handed the task to parcel firms which are charging additional handling fees for each package sent to the EU from the company’s factory in Northampton, a town famous for its boots and shoes since the 1400s.

Shipments that used to take one day to arrive are now taking three or four. And when the couriers get things wrong, the strain of the paperwork only grows at a time when Covid-19 is already stretching many manufacturers to the limit.

Martin Mason, managing director of British luxury shoemaker Tricker’s poses for an interview where he discusses European Union customers affected by new tax costs

Brexit: Boss of English shoemakers Tricker's says red tape will cost firm an extra £100,000 a year

Master bespoke shoemaker Scott McKee repairs a shoe at Tricker’s in Northampton

Brexit: Boss of English shoemakers Tricker's says red tape will cost firm an extra £100,000 a year

Master bespoke shoemaker Scott McKee works at luxury shoemaker Tricker’s in Northampton

‘We’ve been through… world wars, financial crises, stock market crashes. Last year, the first lockdown was the first time we’d actually been closed,’ Mr Mason said on an empty shop-floor in the factory where normally 86 employees would produce 1,000 pairs of shoes a week.

‘Even during the world wars we were open, making boots for the army,’ he said. 

‘To deal with Brexit on top of what we’ve been experiencing with coronavirus has been certainly a double whammy.

We will get through it. It will be tough.’

Boris Johnson has said the recent disruptions to trade are largely ‘teething problems’ and he points to the potential for export growth if Britain strikes trade deals with the United States, India and beyond. 

Compounding the problems are VAT invoices sent by parcel firms for shoes sent back to Northampton by wholesalers and by EU clients seeking repairs which should incur no tax.

The expected Brexit-related costs of about GBP100,000 pounds a year would be equivalent to almost 10 per cent of online sales which in turn represent about 15 per cent of total turnover at Tricker’s, Mr Mason said.

That has led the firm to raise prices for EU customers and absorb the rest of the hit in its bottom line.

Brexit: Boss of English shoemakers Tricker's says red tape will cost firm an extra £100,000 a year

Tricker’s said invoices are mounting from parcel firms that ship the company’s heavy GBP450 brogue shoes and boots to EU clients

Brexit: Boss of English shoemakers Tricker's says red tape will cost firm an extra £100,000 a year

Tricker’s has handed the task to parcel firms which are charging additional handling fees for each package sent to the EU from the company’s factory in Northampton, a central English town famous for its boots and shoes since the 1400s

VAT rules for exporting goods from UK to EU 

Britain and the EU agreed to zero tariff and zero quota trade on goods – meaning that businesses will not face costly tariffs when trading.

However, British firms must now comply with different VAT rates across the bloc’s 27 member states. 

With the withdrawal of the UK from the EU, all movement of goods between Britain and mainland Europe now count as imports and exports, meaning they are subject to import VAT.

Businesses will require an Economic Operator Registration Identification (EORI) number from both the UK and EU to move goods.

The UK has also introduced a postponed VAT accounting import VAT deferral scheme, so importers don’t need to pay cash to UK customs.

But, many EU countries do not offer a similar scheme to UK businesses. 

 

‘I think all companies here in the UK are getting extra costs as a result of the deal,’ Mr Mason said.

Other British companies, who opted not to pay the VAT themselves, are now facing a wave of returned goods from disgruntled customers. 

British consumers are also balking at paying more than they expected for goods bought from EU vendors.

Brexit has tangled up many businesses from fashion producers to fisheries, in extra paperwork and higher costs, hindering or even preventing them from getting goods into the EU.

British government budget forecasters estimate that the country’s economy will be four per cent smaller in 15 years’ time than it would have been had it stayed in the EU.

Mr Mason said there were some potential upsides for Brexit for his firm which exports about 85 per cent of all the shoes it makes.

A deal agreed with Japan – which accounts for a third of Tricker’s business compared with about 15 per cent which comes from the EU – would be a help and an agreement with the United States might lower its import tariffs.

But for now, his immediate priority is to sort out the VAT problems.

‘I really hope that over time common sense prevails and people do understand that this friction of getting product into Europe has got to be smoothed down,’ Mr Mason said.

‘It is a bit of a barrier to recovery post Covid, but… if wise heads get together and solve some of these issues then hopefully it will become easier.’

It comes as Up to 50 per cent of all lorries bringing goods into Britain from the EU are crossing the Channel back empty afterward as British businesses shun exporting because of Brexit red tape.

The Road Haulage Association (RHA) says that far fewer containers filled with goods are leaving for the continent from the UK since Boris Johnson agreed a trade deal with Brussels.

UK businesses that export to the EU are reportedly being encouraged by trade officials to set up hubs across the Channel so they can avoid post-Brexit disruption.

Richard Burnett, chief executive of the RHA, said: ‘Most of the trucks that bring goods into the UK are not British and we’ve seen a noticeable reduction in hauliers wanting to make the journey’.

He told The Times: ‘There is not normal demand from exporters, which means around 40 per cent are returning to the Continent empty. They are also worried about being stuck in port if they don’t have the right customs paperwork.

The new Covid tests are also very unpopular and are having an effect on the number of hauliers who are prepared to make the trip.’ 

Some firms claim they have been advised to set up subsidiary companies in the EU so they can avoid extra paperwork when exporting products into the trade bloc. 

Brexit: Boss of English shoemakers Tricker's says red tape will cost firm an extra £100,000 a year

Some firms claim they have been advised to set up subsidiary companies in the EU so they can avoid extra paperwork when exporting products into the trade bloc.

Pictured: Lorries quieing-up at the Port of Dover on Friday

Brexit: Boss of English shoemakers Tricker's says red tape will cost firm an extra £100,000 a year Brexit: Boss of English shoemakers Tricker's says red tape will cost firm an extra £100,000 a year

Co-founder of Macclesfield-based Cheshire Cheese Company, Simon Spurrell (pictured left), was one of those who claimed he had been told to set up shop in the EU. Ulla Vitting Richards (pictured right), told the BBC she had been advised to move her stock to a warehouse in Germany in order to keep exporting to the EU

One boss of a UK cheese producing company told the BBC he was advised to set-up in Europe to avoid disruption to his EU exports.

Another, the boss of a clothing firm, told the BBC that they had been encouraged to link up with a distribution centre Germany in order to keep exporting to the EU.

What are the extra charges and paperwork and why were they introduced?

Shipping goods either way across the UK-EU border now takes longer and is more expensive since the UK left the EU’s Customs Union and Single Market. 

Since January 1 a new customs regime has been in place that treats the UK as an external ‘third country’ for goods being imported and exported into and out of the EU. 

Although the terms of the free trade deal mean there are no tariffs or quotas, the small print of the deal imposes new red tape and charges for goods being moved across the border.  

Customs clearance charges must now be paid, while many couriers also add on postal or handling fees to account for the extra paperwork they now need to process.  

VAT is payable by businesses when they bring goods into the UK. Goods that are exported by UK businesses to the EU are zero-rated, meaning that UK VAT is not charged at the point of sale.

Some goods may need a rules of origin document.   

And once they arrive at the ports, there are new checks by officials which also slow down the transport process. 

The extra time taken for goods to cross the border means some shipments have been delayed. 

That means that in addition to extra fees at the border goods are also taking longer to travel from retailer to customer – complicating the situation further.  

It comes after fashion industry experts warned High Street retailers and luxury brands may burn items returned by customers that are now stuck in European warehouses rather than bringing them back to the UK to avoid the cost and hassle of red tape. 

The Department for International Trade told MailOnline it was ‘not government policy’ to advise businesses to set-up subsidiaries abroad.

However, co-founder of Macclesfield-based Cheshire Cheese Company, Simon Spurrell, was one of those who claimed he had been told to set up shop in the EU.

Mr Spurrell reportedly approached the Department for Environment, Food and Rural Affairs for advice over the need for a veterinary-approved health certificates for exports.

The firm was reportedly being asked to pay GBP180 for the certificates to export gift boxes costing up to GBP30 each.

He told the BBC he had been advised to set up a packaging firm across the Channel.

Mr Spurrell said: ‘They told me setting up a fulfilment centre in the EU where we could pack the boxes was my only solution.’

He added that the business was now looking to ‘test the water’ with a business in France, but it had scrapped plans to build a new GBP1million warehouse in the UK – which he said could have created up to 30 jobs. 

Another business owner, Ulla Vitting Richards, told the BBC she had been advised to move her stock to a warehouse in Germany in order to keep exporting to the EU.

Ms Richards, who runs UK-based sustainable fashion firm Vildnis, told the BBC: ‘(The official from the Department of Trade) told me we’d be best off moving stock to a warehouse in Germany and get them to handle it.’

She says she has stopped exporting to the EU since Brexit.  

It comes as it was revealed earlier this week UK Fashion & Textile Association chief Adam Mansell said retailers may now find it cheaper to simply dispose of the items at the EU warehouses rather than pay to have them shipped back to Britain.

How delays at the border are hitting food deliveries  

There are more forms to fill in before lorries arrive at the Channel and other crossings following the UK’s exit from the Customs Union and Single Market. 

And once they arrive at the ports, there are new checks by officials which also slow down the transport process. 

For UK retailers, it means there is a slowdown in receiving stock from the EU. It takes longer for European hauliers to get here, and UK-based lorries are slowed down on the way out and then slowed down on the return trip as well.

This is leading to empty shelves and shortages of some goods for consumers. 

The most immediate problems are with perishable goods – food and drink. Alcoholic drinks and staples including broccoli, tomatoes and cheese have been in short supply because they are imported from manufacturers in Europe.

The problems are similar for exporters, UK firms sending goods to be sold in Europe. 

The import problem is most acute for perishable foods.

Fish and shellfish that are sold to European markets are decomposing in the back of lorries because of the time taken to get across. And now the problem is affecting other, more robust foods, like meat and vegetables, which are rotting on the dockside. 

Scottish seafood firms last week warned they are just ‘days from collapse’ unless emergency cash is paid out to compensate for the Brexit border chaos. 

Hauliers have also faced difficulties transporting stock to Ulster under the Northern Ireland Protocol in the Brexit deal. 

The protocol is designed to allow Northern Ireland to follow the EU’s customs rules to prevent the establishment of a hard border on the island of Ireland.

But this has caused delays at the ports on either side of the Irish Sea because of new declarations and checks.   

He said: ‘It’s part of the ongoing small print of the deal. If you’re in Germany and buying goods from the UK, you as the German customer are the importer bringing goods into the EU.

‘You then have a courier company knocking on the door giving you a customs clearance invoice that you need to pay to receive your goods.’

Mr Mansell said further customs paperwork facing UK retailers when goods are returned includes an ‘export clearance charge, import charge arrival, import VAT charge and, depending on the goods, a rules of origin document as well.

Lots of large businesses don’t have a handle on it, never mind smaller ones.’

Following Britain’s exit from the Customs Union and Single Market, EU consumers buying a coat, a pair of boots or any other product from a UK-based retailer now have to pay charges including import duties and courier or postal handling fees.

Some of the same costs and red tape also apply to British customers buying products that have been shipped from the EU – adding a third to the cost of online orders and slowing down deliveries due to extra checks at ports.

Customers in the EU are being asked to pay the extra costs by couriers when the goods reach their door, so many are rejecting them to avoid paying the bill. Figures from data firm Statista show that 30% of orders are now being returned.

Four major UK High Street fashion retailers are have begun stockpiling returns at warehouses in Belgium, Ireland and Germany, reported the BBC. One brand will incur charges of almost GBP20,000 to get the returns back.

Apart from the charges, businesses need to also complete Customs declaration forms detailing the contents, their origin and value to get goods through ports.

British shoppers have already complained about being hit with punishing ‘Brexit fees’ on purchases from Europe, which could add more than third to the cost of a new outfit.

Londoner, Ellie Huddleston, aged 26, found the charges added up to GBP82 for a GBP200 coat and another GBP58 for a selection of blouses that had a list price of GBP180.

Lisa Walpole, from Norfolk, was told to pay GBP121 in relation to a GBP236 clothes order she made from the Norwegian website Onepiece.com, which specialises in premium jumpsuits.

And Helen Kara, from Uttoxeter in Staffordshire, was hit with a bill for GBP93 after purchasing GBP292 worth of bed linen from Urbanara.co.uk, which is based in Berlin.

Ms Huddleston said she was surprised by the fees, which were notified by the two international courier firms who were handling the shipments.

‘I didn’t even know when the parcels would be coming – so I sent both back without paying the extra fees and won’t be ordering anything from Europe again any time soon,’ she told the BBC.

One of the biggest problems is that people shopping with an EU-based store online find it difficult, if not impossible, to understand how much the extra charges will add up to.

Mastercard is blasted for ‘greed’ and ‘opportunism’ by charging British card users FIVE TIMES the fees on items ordered from EU then blaming Brexit 

Brexit: Boss of English shoemakers Tricker's says red tape will cost firm an extra £100,000 a year

Chair of the all-party parliamentary group on Fair Business Banking, Kevin Hollinrake, said the change was ‘alarming’

Mastercard has been accused of ‘opportunism’ and ‘greed’ for increasing fees for British shoppers using debit or credit cards to buy from EU-based companies five-fold.  

Visa and Mastercard levy ‘interchange’ fees on behalf of banks for card payments that used their networks. 

The European Union brought in a cap in 2015 amid fears over hidden fees costing companies hundreds of millions of euros, meaning higher prices for consumers.

Mastercard has now revealed that the cap does not apply to some transactions following Brexit, as payments between Britain and the European Economic Area are now technically ‘inter-regional’, the FT reports. 

The company will raise its credit card charge from Britain to the EU from 0.3 per cent of the transaction’s value up to 1.5 per cent from October 15, with debit card payment fees jumping from 0.2 per cent to 1.15 per cent. 

The change will reportedly be a benefit for British banks and card issuers rather than Mastercard, but it has sparked a backlash from companies who rely on online payments.  

Chair of the all-party parliamentary group on Fair Business Banking, Kevin Hollinrake, said the change was ‘alarming’.

He added: ‘This smacks of opportunism and I would urge the regulators to step in as a matter of urgency to ensure that financial institutions do not use Brexit as an opportunity to hike up costs that consumers will ultimately bear.’ 

Head of policy at the Coalition for a Digital Economy, Joel Gladwin, said: ‘Some people might put this change down to Brexit, but it is actually just greed.

It is well within the power of the card schemes to make merchants’ lives easy and keep things operating as they were pre-2021.

Brexit: Boss of English shoemakers Tricker's says red tape will cost firm an extra £100,000 a year

Visa and Mastercard levy ‘interchange’ fees on behalf of banks for card payments that used their networks

‘Not only does this hurt the already squeezed bottom lines of ecommerce start-ups and subscription businesses, it comes at a time when a huge number of small businesses have shifted to online models to survive.’

The change could mean consumers see higher costs of companies pass on the fee.

Amazon UK domestic purchases typically go through a company based in Luxembourg. 

A source familiar with its plans said there could be a change of location for the UK store to avoid fee increases for those who use the platform. 

Hotels, airlines, travel groups and car rentals could also be hit by the move, according to Callum Godwin, chief economist at global payments consultancy CMSPI. 

He added that any sector where the consumer is in Britain and the merchant is in the EU may be affected.  

Visa told the FT that the company would aim to provide clients with ‘advance notice’ if a change to interchange became ‘appropriate’.  

The announcement is one of a series of challenges now facing Britain in the wake of the country’s exit from the European Union – and the end of the transitional period.   

Recent reports revealed up to 50 per cent of all lorries bringing goods into Britain from the EU are crossing the Channel back empty afterward as British businesses shun exporting because of Brexit red tape.

The Road Haulage Association (RHA) said that far fewer containers filled with goods are leaving for the continent from the UK since Boris Johnson agreed a trade deal with Brussels.

And UK businesses that export to the EU are reportedly being encouraged by trade officials to set up hubs across the Channel so they can avoid post-Brexit disruption.

Richard Burnett, chief executive of the RHA, said: ‘Most of the trucks that bring goods into the UK are not British and we’ve seen a noticeable reduction in hauliers wanting to make the journey’.

He told The Times: ‘There is not normal demand from exporters, which means around 40 per cent are returning to the Continent empty.

They are also worried about being stuck in port if they don’t have the right customs paperwork. 

‘The new Covid tests are also very unpopular and are having an effect on the number of hauliers who are prepared to make the trip.’

Some firms claim they have been advised to set up subsidiary companies in the EU so they can avoid extra paperwork when exporting products into the trade bloc.

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