With the UK just over six months into the post Brexit landscape and five years since the Brexit referendum, we thought it the appropriate time to review how the UK retail sector has been affected.
Impacts on retail sectors employment so far
Brexit has resulted in a new points-based system, which now means there are more hoops to jump through for migrant workers to qualify for new visas. Additionally, Covid-19 has been another predominant obstacle in retailers employing the labour they need, coupled with travel restrictions, many potential candidates looking to come to the UK from abroad are struggling.
The impact of these obstacles has meant that the existing skills gap has once again widened, raising demand to the highest it’s been. Many businesses have realised the importance of retaining existing staff, with some introducing significant pay rises as an incentive.
Not only is staffing a problem, a lot of firms are experiencing significant supply chain disruption and importing delays. Some retailers have resorted to holding larger volumes of stock to ensure they are able to meet demand.
Which retailers were well prepared for the Brexit deal and how are they faring now?
Retailers who were able the source the products they needed locally, without the need to look internationally were the best prepared for Brexit and remain good performers. This meant they were able to minimise the risk of disruption and strengthen their supply chain.
On the other hand, there are now businesses who are now struggling as they were not well prepared for Brexit or couldn’t meet the increase in additional costs. With additional border checks now in place and increased delays on cross-border goods movements, retailers who rely on the smooth running of these border movements should take advantage of any opportunities to defer tax and duty payments. One scheme to consider is the Postponed VAT Accounting scheme, which can be used to lift pressure on cashflow during this critical time.
The impacts of import/export activity and border checks on UK retail
Following Brexit, a growing number of UK SME retailers have decided to establish a branch or subsidiary in the EU, in order to improve efficiency by avoiding border delays. As a result, any goods that are imported from the Far East can go straight to their customers in the EU, without having to come in and out of the UK incurring additional costs and potential delays.
Last week, on 1 July 2021, new EU-wide rules came into effect, altering the VAT treatment of EU business-to-consumer trade. These new rules mean businesses no longer need to register in multiple member states to gain access to the EU marketplace. UK retailers can now opt to register in a single EU Member state and file a new One Stop Shop (OSS) VAT return to account for VAT on the sale of goods in the EU. To take advantage of these new rules, business owners should make sure they are familiar with the news rules and seek appropriate advice on pre-registration.