ponders nirvana.
Effective 1 January 2015, Vexillia Limited will cease to be registered for VAT in the U.K. The website and shopping cart will be closed for 24 hours from midday, 31 December 2014, to allow the necessary changes to be made.
If you'd like to know why we taken this step and what it means for you, read on.
Why Do This Now?
Vexillia Limited has always been voluntarily registered for VAT since its inception in 2005. Although our turnover doesn't mean we must register, voluntary registration offered two benefits: reduced prices for customers outside the E.U., and reduced stock prices from major E.U. suppliers, allowing us to invest in more ranges, more often.
The benefits came at the cost of increased business complexity and a significant administrative burden, but the overall effect was positive. In the last few years, the benefits of voluntary VAT registration have been steadily eroded, and we have been looking for ways to simplify the business for some time. The major factors to date have been:
- Since 2012, the Royal Mail have significantly increased the cost of airmail, making buying from the U.K. less attractive to overseas customers.
- In recent years, we have been buying from fewer E.U. suppliers, as they either cease trading (Venexia, Acies Edizioni) or suspend production (Corvus Belli).
- The recent #VATMOSS débâcle over VAT on digital sales was the final straw. As a VAT-registered business, the administrative burden would have been ridiculously high and completely out of proportion to our digital sales volume.
The consequence of all this is that we applied to de-register (sorry about the jargon) for VAT early in December 2014, and our application has now been accepted. From 1 January 2015, we are no longer legally allowed to levy or collect VAT.
What Does This Mean for U.K./E.U. Customers?
Initially, retail prices will be unaffected (see later) but lower delivery rates will be put in place as we will no longer have to levy VAT on our delivery charges. This will mainly benefit European customers, but U.K. customers will benefit from a lower minimum delivery charge, as well as lower charges for the Royal Mail and Next Day delivery options.
As changing prices is a major task, we will be reviewing our prices, range by range, in Q1 2015. Sadly, the scope for lower prices is very limited. Although we no longer have to include VAT in our prices, this is essentially offset by a 20-22% increase in the cost of both stock and delivery from our main suppliers.
What Does This Mean for Overseas Customers?
From 1 January 2015, overseas customers will pay the same price as E.U. customers. I know this subject confuses many customers but put simply, as we will not be registered for VAT, we cannot offer VAT-free prices like we used to. The current VAT-free prices will remain in place until 31 December 2014, so there's a limited opportunity to order at lower prices.