Pre-Brexit update

Update 31st Jan 2020: We are leaving the EU today with an interim deal that means nothing changes in the realm of selling and fulfilling orders until 31st December 2020. So there are no new customs or VAT rules or procedures and delivery times will broadly remain as normal. Everything else discussed in this post remains a possibility for 2021 and this will become clear over the next year. If anything happens that will change how we run the business, we will be updating customers as soon as we know ourselves. Thanks to everyone all over the world who supports our business. 

With less than two weeks to go, we still don’t know what Brexit will look like, or whether it’s happening at all on October 31st. Like every other small business in the UK we’ve been trying to plan, without having much idea of what we’re planning for. In some ways we’re at a significant advantage, we already work with businesses and have customers based outside of the EU. What we don’t know, and can’t really plan for, is how much the changes to customs will cause significant delays in post to and from the EU, and whether that will have a knock on effect beyond UK-EU mail.

If a no-deal scenario goes ahead we expect EU customers to have to pay both a customs fee and VAT to receive their packages, and that the consequent processing will mean it takes significantly longer for those to arrive (right now delivery times to the EU can vary a lot but are often within 3-5 days).

We’re planning to change all of our pricing, to make sure that EU customers aren’t charged double VAT, in the event of a no-deal Brexit. You may also remember all the fuss about VAT-moss a few years ago. It’s a bit complicated but any business (located anywhere in the world) selling digital services, including pdf knitting patterns, to a customer in the EU is liable for VAT at the rate in the customer’s country. Right now we can use the moss system to report and pay all the VAT due to all of those countries via one online portal. After Brexit we’ll still have to do that, but won’t be able to do so via HMRC and will have to register for moss in another country. We can’t yet do that, because no one knows what’s going to happen, and the amount of time in which we have to sort it out is very short. No one has been able to tell me what the situation for UK VAT on digital services will be. In order to make sure that we’re correctly changing prices and reporting systems we may have to take our website offline for a few days, especially as the Brexit day is a Thursday rather than the beginning of a work week.

In terms of yarns and other products that we import from the EU and EEA, the major advice has been to stockpile product in case of delays. That obviously requires significant cash reserves and storage space. I’m grateful to be in a better position than many businesses, but we definitely don’t have the cash to risk investing in more stock than we already have right now. That does mean that you might find the most popular colours of yarns going out of stock and that import delays mean that restocks take longer. It’s always useful to us, if you’re interested in ordering something and happy to wait a little, if you fill out the box on the product page to be notified when it’s back in stock. You get a helpful email and we’re able to prioritise our budget better.

We plan to stay open post-Brexit for as long as it’s financially feasible, and have plans in place to keep things running as smoothly as possible for different potential scenarios. However, if you’ve been thinking of ordering something soon it would be advisable to do so in the next few days. Thank you, from the bottom of my heart, for all of your support in this uncertain time. I know many of you are struggling with the personal and financial impact of Brexit, and we’re thinking of you.