The day the Brexit deal was announced, Hattie Tennant spent hours on the phone to her accountant, reading through different subreddits and talking to other small business owners.
“Up until the day the deal went through, there was no information,” says Tennant, the co-founder of Fruity Booty, a London-based sustainable lingerie and intimates label. “After spending at least four days trying to get to grips with it my accountant told me that nobody really has the understanding. He was interested in what I had read because it was different to his reading. No one seems to know what’s going on.”
Before Brexit regulations came into effect only a week after being announced, UK businesses that shipped to European customers only had to print out a shipping label and send it off. Now there are commercial invoices, new tax codes and increased shipping costs to get to grips with. For small business owners like Tennant – and with a 30 percent increase in newly incorporated businesses since the beginning of the pandemic – it has been a minefield. The new regulations have been a source of frustration for months, especially for those without entire teams dedicated to working out how to navigate them.
Camilla Stolerman, founder of Camilla Bloom, a London-based knitwear brand, also found it difficult getting to grips with the new rules. “The information that is available is just so confusing and really wordy. It's almost impenetrable, in terms of being able to figure out what is what, especially if you're someone like me, who finds lengthy paragraphs of information really hard to process,” she explains. “Having a new business on top of that, you don’t have time to wade through this information. It's not cost-effective to get a customs agent either. It’s just too expensive.”
Some of the orders Stolerman sent out across Europe at the start of January have been sitting with customs for over a month due to backlogs caused by extra administrative tasks. Camilla Bloom has attracted more of a European fanbase since it began in 2018 – an invaluable source of customers for Stolerman. Now she’s worried that unpredictable delays could affect her brand.
“I'd definitely noticed a bigger international customer, since everyone’s kind of more engaged online [during the pandemic],” she says. “When I did pop-ups, there were a lot of European customers coming to London because they want to buy British brands. Now they’re going to be less inclined to do that. If they buy a dress and they don’t know the fit, they've also been charged 20 percent extra in fees just to get it. It's even more of a risk for European customers to buy into a new brand that they don't necessarily know much about. It’s such a shame, really.”
With an estimated quarter of all of Fruity Booty’s orders coming from EU countries, Tennant says that her customers were confused about the incoming changes too. “They were DMing us asking what's going to happen – as a brand we try to be as transparent as possible, so it was really hard [to respond] unless you say something vague. I didn’t want to do that because those kinds of messages upset me as a customer. I feel accountable for people who have saved up their money and they wanted to buy from us and then potentially get charged even more to receive it.”
Even though there are fewer changes for brands based in the EU, Alice Brnra, the founder of Italy-based handmade intimates brand Soft and Wet says that there was still some confusion. “We have a mostly UK customer base and now filling in the shipping pages takes double the time,” she explains. “We had to ask our FedEx person who helped us with the new customs procedures and invoices. It was necessary as figuring it all out by ourselves would have been confusing.”
There are some workarounds in the meantime, but most of them won’t work for small business owners. To bypass the extra tax fees for the consumer, owners can register for VAT in the European countries they sell to, but that wouldn’t be cost-effective in multiple countries. Or they can pivot to selling through large e-commerce platforms like Amazon, who have a service that works out tariffs and extra costs, but that doesn’t appeal to sustainable business owners like Tennant. “They’re the polar opposite of what our brand stands for,” she says.
Further regulations on import duty on goods arriving from the EU threaten to change the way businesses like hers operate for good. “We buy deadstock fabric from mainly the UK, but also lots in Portugal, Italy, France, wherever previous underwear and lingerie hubs have been,” she explains. “I'm actually really quite terrified about it. We thought it would just affect sales in Europe but now for our customers all over the world, our prices may have to increase… Now we’re trying to find ways to absorb the cost as much as possible because we believe in charging a fair price. We're not going to suddenly rack up our prices and confuse our customers.”
For now, the future of small UK businesses operating in the EU remains unclear. They’re just hoping the government offers help in some form. “I'm just hoping that once we sort of settle in to this new normal, things will become a little bit clearer. Maybe legislation will be revised and at least a toolkit will be given to smaller businesses to be able to manage it,” Stolerman says. “But at the moment there is mass confusion. It’s so damaging. If you want to encourage small businesses in the UK, this is definitely a way to stifle it, to be honest.”