Brexit tips: including what to do with post-Brexit returns

From 1 January 2020, the United Kingdom will no longer be part of the European Single Market. At the time of writing, it looks as if we are moving towards a No-Deal Brexit, so a lot of things are going to change in the field of e-commerce with the UK. In short: there will be additional customs controls and additional regulations. Not nice. That's why I've listed a number of things that will make things a bit more manageable, because Brexit is certainly not a piece of cake.

Below I discuss a few brief concepts that are important to your e-commerce business. Most of it you (hopefully) already know. However, my guess is that you don't yet have a good answer on what to do with the return flow from the UK. In the last part of this article you will read what we have come up with on that.

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The topics covered:

• EORI number 
• INCOTERMS
• Commercial invoices
• Prices on your website
• Last but not least: Returns from outside the EU

Request an EORI number

If you don't have an EORI number yet and you want to do business in the UK after 31 December 2020, it's now high time to get the application started. Usually the application takes 1-2 weeks, so you have no time to lose. In a nutshell, an EORI number is an identification number for declaring goods and applying for customs clearance. With an EORI number you save a lot of time and costs because customs can efficiently exchange your data with other countries within the EU or beyond. You will also need an EORI number if you have your declarations made in the UK by a third party, for example your forwarding agent or a UK tax adviser.

Through this link you can request your EORI number.

View your INCOTERMS

By agreeing an Incoterm® with your customer, you know who is responsible for arranging transportation, who is responsible for costs and who bears the risk of damage to, or loss of, goods.

Probably your English customers ask for delivery condition DDP because they themselves have no experience with customs formalities and do not want any hassle at the border. With DDP you will make a local delivery in the UK and prepare these goods for customs in the UK. This has tax consequences for you in the UK and the costs are for you as an e-commerce company.

Delivered Duty Paid (DDP) in short:

• Obligations lie with the seller
• Arranges and pays for transport to the place of destination
• Responsibility for customs clearance and payment of import duties (import duties and VAT)
• Carries risk of loss and damage
• Best customer experience for the British consumer

Read more on the KVK website about DDP.

Immerse yourself in commercial invoices

In the case of a no deal Brexit, goods traded between the UK and the EU are subject to the same requirements as goods shipped, for example, to Japan or the US.

A commercial invoice containing the information necessary for customs clearance is required for each consignment. This will enable the authorities to determine whether the goods may be imported into a country or exported from a country and the corresponding checks which may be required. The information is also used to establish import duties and taxes.

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Difference between CN22/23 & commercial invoices

There is often confusion about the difference between CN22 / CN23 forms and the commercial invoice. In short: a commercial invoice is always needed for all e-commerce shipments outside the EU. Strictly speaking, a CN22 or a CN23 form is only required when you send an e-commerce shipment through a postal network (in an envelope with a stamp). However, as a rule it is advisable to also include the CN22 / CN23 when sending parcels through a parcel network (such as DHL and UPS). The more complete the documentation is, the smaller the risk of delays at the border. Finally, the difference between CN22 and CN23 is clearly explained on the PostNL website.

When you generate your commercial invoice and/or CN forms, it is important that you are careful with the classification of your products (the so-called HS code). In preparation for Brexit, it is therefore important that you make an inventory of which HS codes you have in your range. You can easily look up the HS code via the Dutch Customs website.

Show me the correct prices for British customers

After the Brexit, European products are exported to the UK at the 0% rate. So from that moment on, you have to deal with the British import and tax system. The VAT (the VAT in the UK) is calculated on the product value (ex VAT of course) and any import duties that may apply to your products. In order to show the correct price to the British visitors of your website, it is therefore advisable to find out whether your products are free of import duties and then apply the correct British VAT rate (20%). In addition, you may incur additional costs in the warehouse for the administrative part. Think for example of printing the physical commercial invoice document and pre-registering it with the forwarder.

Important to know for shipments worth more than £135 

By filing a declaration, UK Customs charges a customs clearance fee. If you send goods with a value of up to £135 excluding VAT to the British tax authorities. For shipments with a higher value, import duties may also be charged.

Return shipments outside the EU

When one of your UK customers wants to return a cleared product, he is strictly responsible for doing so. In practice, returns at the border pose few problems. But don't rejoice too soon: shipments may still be stopped at customs. This can cause significant delays. In some cases, local customs may even contact the consumer. A process that you don't want to expose your customers (if they are dear to you) to. That's why it's important to get your post-Brexit-British return flow set up properly before it happens. There are at least two good routes to take regarding the return flow, the pros and cons of which I have listed below.

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Option 1: Take an English return address

Pro: The customer can return domestically and is in any case not bothered by administrative work and/or communication with customs.

Pro: Domestic returns are often cheaper than cross-border returns

Con: The lead times are often long (7+ days)

Con: You need to connect and maintain a specific party in the UK to handle your return flow

Con: The tracking of a consolidated return flow is usually faulty or not present at all.

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Option 2: Send returns cross-border to the Netherlands

Pro: Lead-time is short and therefore fast handling with the customer is possible, which is NPS-enhancing (2-3 days).

Pro: You have end-to-end tracking available, so you always have insight into where your products are.

Con: The price can be higher than option 1

Con: Without the right preparations, you can burden your customers with administrative work.

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The golden mean: tracking, short lead time, no administrative work for the customer

Returnista wouldn't be Returnista if we didn't have a convenient solution for cross-border returns. We focus on the following points: end-to-end tracking, a short lead-time, a good rate and above all a smooth returns process for the consumer. As of the new year we will therefore introduce the automatic commercial invoice generator for all shipments outside the EU. For convenience, we call it the Brexit tool. A customer who registers a return from outside the EU, for example from the United Kingdom, will receive a custom-made commercial invoice in addition to the usual return label. Online stores that have their international returns handled by Returnista thus run considerably less risk of battles with customs. And perhaps even more important, your non-EU customer can shop without being saddled with administrative work. Handy say.

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Let's get back to it:

• Provide an EORI number
• View your INCO-terms and determine the appropriate conditions for your business
• Talk to your forwarder, fulfilment centre and/or carrier to automate commercial invoices and CN22/23 forms for outbound shipments.
• Make sure your prices are adjusted and comply with English conditions.
• Immerse yourself in the return flow you can expect from the UK and make a choice

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