Our Business Perspective (Focused on Trade)
Our business enjoys the full scope of what the European Union offers in terms of the freedom to trade amongst member states and without that freedom it dramatically increases the trading considerations, costs and viability. Staying within the EU is vitally important to the future of the business.
The business buys left hand drive cars and commercial vehicles from both the continent and the UK to supply an array of customers including private, military and diplomatic buyers whom live, are moving too or are being posted around Europe and the rest of the world. Every day we are importing and exporting new and used vehicles into the UK from EU member states, we also export from the UK to EU countries and EFTA countries as well as regularly carrying out triangulated sales whereby a car is purchased by us in the UK from one member state and is directly exported to another one. We are also working with a number of different types of VAT supply including vat paid sales and tax free sales. All of this is made easier by the guidelines and rules laid out of the European Union.
In effect, selling a vehicle to another member state is made really very easy with the ability for us to simply invoice customers as if they were UK customers, even when we adopt a tax free sale (there are some special rules for motor vehicles and VAT) this is made simple by simple document that does not cost anything. Our client incurs no additional costs when importing our cars in terms of customs clearance fees and of course they pay no import duty on the purchase either. The only consideration we and they have is whether or not VAT needs to be paid and accounting and managing this is made simple as well.
Selling to a customer in Barcelona from Cambridgeshire is as easy as selling to one in London. It enables us to access and supply markets easily putting us on a level playing field with those around Europe.
We also supply EFTA countries like Switzerland and Norway and whilst these countries remain good customers of ours there are a number of other considerations for us as business and equally our clients. VAT is paid regardless and import duty is invariably due on our vehicles. On top of that there are additional costs and administration requirements in dealing with customs which include customs fees, transit documentation and of course the resource required to liaise with these organisations. Equally the sale is treated as a direct export which requires additional supporting documentation to back up the export of the goods and its tax status or our tax liability.
A withdrawal from the European Union would have a major impact on the business and one that would likely result in us needing to “set up shop” in another member state to retain the ability to trade within the union. The complexities of customs alone on the average transaction would be off putting enough for any potential buyer when faced with buying from us in the UK and the additional customs fees just to obtain customs clearance would as a % of the transaction also put clients off. There is also the chance that imports from the UK would attract import duty and this would instantly make us uncompetitive. It is not only that though that would be a consideration even our imports to the UK may reduce currently as for many of our customers the opportunity of buying and paying tax on their new car in the UK is attractive especially when travelling between multiple European destinations. As such 50% of our business is import to the UK. We import tax free and pay the 20% VAT here. That is 20% of the value of each car that goes straight in to the UK treasuries coffers this would likely reduce as additional costs for UK import may outweigh registering in France, Spain or another state.
For us the business has seen growth even having started during the global recession and we can continue to grow here in the UK but the risk of a Brexit potentially means the need to remodel the business to operate outside of the UK in part or entirely. Not doing anything could have detrimental impact to its future – a risk we won’t take!
Chris, Director, Insignis Cars, UK