The boss of a 192-year-old luxury shoemaker says Brexit red tape will cost the firm an extra £100,000 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 £450 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
Master bespoke shoemaker Scott McKee repairs a shoe at Tricker’s in Northampton
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 £100,000 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.
Tricker’s said invoices are mounting from parcel firms that ship the company’s heavy £450 brogue shoes and boots to EU clients
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
‘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.
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
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.
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 £180 for the certificates to export gift boxes costing up to £30 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 £1million 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.
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 £20,000 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 £82 for a £200 coat and another £58 for a selection of blouses that had a list price of £180.
Lisa Walpole, from Norfolk, was told to pay £121 in relation to a £236 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 £93 after purchasing £292 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.