I wasn’t taken by surprise, exactly. I run a small perfume business, and in mid-December we stopped sending deliveries to European Union countries because we wanted to ensure nothing was caught in the rush to beat any new trading rules. In some ways, I had been preparing for such issues ever since the Brexit referendum was called several years ago. I always feared there would be difficulties for small businesses.
A little more than a month into the new regime, and it’s clear that with every new hurdle, there are extra fees to pay. Whether it’s importing raw materials or sending our products around the EU, additional forms need filling in and costs are nudged up. Our perfumery is dealing with new customs rules and new VAT regulations, and losing access to the EU cosmetics market. At midnight on 31 December, all our perfume products automatically became illegal in the EU.
I could make them legal again. To do that, I would need a representative based in the EU – a legally appointed responsible person (RP) – but to set this up, companies offering the service are quoting up to £1,000 a year per product, and we’ve got 60 different items to sell. That’s an additional £60,000 of annual expenditure we don’t have. We’ll find a way to make it all work eventually, but until we understand the VAT issues, there’s no point.
One of my friends in the industry thought he understood the new system: last year he confidently said it would only require one extra piece of paper and that there was no need to worry. In January, though, one of his EU-based customers was charged an additional fee of £130 by a delivery company. He still doesn’t know why. For many of us in the independent cosmetics sector – a world away from the multinational brands – we have to pause our sales to customers in the EU until we can figure out these problems. The losses for our businesses are mounting.
Another friend has a wholesale order destined for Germany, but it’s stuck in customs somewhere. A second order set off for Spain, but only got as far as Middlesbrough because the shop owner there now has to be a registered importer. It will take about three months to be registered on the Spanish system because of the sudden post-Brexit rush – combined with a Covid-19 backlog.
Until Brexit was finalised, cosmetics companies all followed EU regulations designed to make sure every product used on people’s skin and hair was safe. When things changed, some of our British customers were delighted for us, imagining that we would be free from EU constraints, and suddenly permitted to use lavish amounts of previously restricted materials such as jasmine, rose and carnation. But what really happened was that in 2019 the government copied and pasted the EU regulations straight into UK law. I watched official announcements about how we would all be free from EU bureaucracy , knowing that it wasn’t quite true. We have shiny new UK regulations that are exactly the same as what was there before – so what was the point?
In late January the Department for International Trade ran an online talk advising on trading with the EU and the rest of the world. It opened with a man telling us, “We’ve cut the red tape and left the EU”. He spoke of the red tape as if it were a single shiny ribbon that Boris Johnson had cut with huge scissors unleashing us to take on the world, like the start of the Great North Run. Next, he proudly told us that 5,000 businesses were taking part in this DIT talk, as if that was a good thing – rather than because thousands of small business owners were desperately trying to figure out the new rules having a drastic impact on their livelihoods.
Meanwhile, there are hundreds of tiny cosmetics businesses in Britain selling at local markets at home and on Etsy for orders further afield. The soap and lip-balm makers I know used to get their cosmetics safety assessed, then just put orders in the post whether their customers were in the UK, Ireland or the rest of the EU. To continue to do so now, they’d have to register for VAT and appoint an RP at great expense. With local markets closed because of Covid-19 restrictions, effectively taking away access to online EU customers is a terrible blow. Without this source of income, many businesses won’t be viable.
When Britain finally settled its trade deal with the EU at the end of December, it hardly seemed sensible to rush everything through while the world struggled with the pandemic. Even tax-return deadlines have been extended. What small businesses needed was to stay in the single market and customs union while we recover from the shock of lockdown. But we aren’t, and we’ve got to get on with it – however, we really needed time to absorb all the new rules we face to sell our products outside Britain. Our politicians wave this away as teething problems, or worth it for some amazing benefits which have yet to materialise. They’re not listening to us.