Editing The Pen Addict 444/transcript (section)

== Ask TPA Segment ==


'''Brad Dowdy:''' The lead question is interesting. And then we have some more in-depth traditional Ask TPA.

'''Myke Hurley:''' Okay.

'''Brad Dowdy:''' But us makers and retailers in the US were caught off guard by some postal service changes, and we have questions about that, specifically from the aforementioned Mr. Jonathan Brooks. And then I copied in an email that I got. Yeah.

'''Myke Hurley:''' So Jonathan's question is, do you think that the new UK VAT system will have an effect on small makers selling to the UK? So basically, in a nutshell, there are some new rules around customs and tax here. And anything under the value of 135 pounds, makers from outside of the United Kingdom now need to start charging tax. VAT is value-added tax that we pay on everything in the UK. The government, our government wants companies from overseas to be collecting this tax and then paying it to the UK government on a quarterly basis. Now, a lot of people don't want to do this because they're kind of like, I don't care, right, about you and your rules.

'''Myke Hurley:''' Ultimately, I think what we're going to see is a lot of people moving to larger platforms. So if you use something like Etsy or eBay to sell your products, you don't have to worry about this because Etsy and eBay will do it for you. I could imagine companies like Shopify trying to find a way to enable this if it becomes a problem in the future. There is actually, I think, a pretty understandable reason for this because obviously we've left the European Union now, right? So everything coming into the UK now has to go through customs. So I think what the thinking is, is they put this in place to try and stop a lot of stuff going through customs because the idea is if you are charging VAT, it doesn't need customs inspection. It just flies through. And then anything over £135 will still go through the customs route to make sure that everything's been done all above board. So I think that's why it's happening, right, that this has been put in place so it reduces the amount of increase on the Border Patrol and the customs force because otherwise nothing's ever going to get through, right? Like literally every parcel is now going through this system.

'''Myke Hurley:''' I think in the short term there's going to be some disruption. I think companies will stop shipping to the UK. I've already seen it, honestly. There are some companies that I've seen, smaller companies, that basically have, and I don't mean this in a bad way, but have decided I can't be bothered to read this or to deal with this because a lot of these are admittedly very small makers. So it's kind of like I don't want to have to deal with whatever this new stuff is, so I'm just going to turn it off for the foreseeable future. Like you can't ship to the UK.

'''Brad Dowdy:''' So let me simplify what this new stuff is from the perspective of a small maker. So let's take Nock, for example. And Myke goes to Nock and Myke would like to purchase a Sinclair. That's $40 US, which is well under the 135 pound limit. So Myke has already been paying shipping, which has increased in the last couple of years. So that $40 product is going to cost him at least $15, $16 to ship. And then I have to tax him 20 more percent on that $40. So he's going to pay additional 20% and he's going to pay the shipping. Or he's going to think about paying 21% and think about paying the shipping. So then on my side, so Myke completes that transaction. He gets his case. I ship it. So on my side, I will have a bucket of funds of 20% that I've charged to the UK that I now have to send to the UK. I have to go register my business with the UK, collect these funds at the time of purchase, and then ship off those funds to the UK VAT registrar each quarter. So that's an additional overhead for me to track and me to siphon off. There's no cost to me other than Myke deciding not to purchase. That would be a cost of a lost sale. And then the time it would take me to manage the books, which in my case would actually be pretty small. But, you know, when you tack on lots of pretty smalls onto something that's already got a lot of pretty smalls, you know, it's just more things. The other issue is we weren't made aware of this until like two days ago. Like this was news to me. I didn't realize this on January 1st until I got an email from stamps.com. On two days ago, on January 11th, I get an email that says, effective January 1st, you need to be collecting all this stuff. I was like, whoops.

'''Myke Hurley:''' Well, there was a lot of obviously to the minute. I mean, I will say that there is also an element of like people, companies in other countries just not like caring to pay attention because there was going to be changes, right? And anyone that was aware of it knew that something was coming, but it is not your, well, it kind of is your responsibility, but not like emotionally or logically your responsibility. You have to care about what's happening in every country all over the place. What I expect will happen is like it really is up to the maker. If you sell to the United Kingdom a lot, you should do this because otherwise you're not going to be able to do it. If you don't.

'''Brad Dowdy:''' And hope your customers are going to want to pay the tax.

'''Myke Hurley:''' Yes. Well, but the thing is though, Brad, we already are, right? In a lot of cases. Like when you're hearing people complain to you about customs fees, it's this 20%.

'''Brad Dowdy:''' Gotcha. It's just coming later in the chain. This is now it's coming earlier in the chain.

'''Myke Hurley:''' Yeah. But also it could be, I mean, I don't know how it's going to go exactly, but could end up being less because we won't have to pay the customs handling fees anymore on these items. Right. Because they won't be handled by customs.

'''Brad Dowdy:''' So from your perspective, you would not necessarily consider me charging you the 20% VAT because you're assuming you're going to get it somewhere. I might as well just get it now.

'''Myke Hurley:''' Yeah. And also, I mean, as someone from the United Kingdom, I see VAT on everything. Right. Right. Like I go to stores and it's like, here's the price. And then you go to checkout sometimes and it tells you plus 20% VAT or you see it on the product page or whatever. Like we're used to paying VAT, right? Okay. And if it does mean that you don't have to pay the customs fees and I don't have to wait the extra time for these items, like that feels like a net win to me as a customer. Okay. Because like I'm still paying the same amount of money that I'm paying. And so, you know, it's just like I, as a person in the UK, hello, here's me. I really want all of the companies that I buy from, please do what you have to do here. I know it's frustrating. I know it's annoying. And I do expect over time it's going to get easier for a number of reasons. I think the process will get easier or the process will change. The process will probably change. And or there'll be companies, platform vendors that try and make it easier for their customers. Because like eBay and Etsy, I've already seen a lot of makers move stuff over to Etsy for the UK, for like the UK stores, because they will take it as part of the payment processing. So I would really, I would be surprised if a company like Shopify or Stripe didn't just do, come up with a product for this, where they're just like, hey, you as our customer, don't worry. We'll charge the 20% and you'll just never see it. And we'll just pay it to the UK government for you. Yep.

'''Brad Dowdy:''' So here, that's what I would like. Here is my thought that I think this is not going to be as big a deal in the end. Number one, your statement on you're going to pay this somehow. That makes a lot of sense. Number two, the companies in the US already pay state taxes individually by county. That is far more complex than a single VAT tax collection. So for example, Nock is based in Georgia. For each county in Georgia, Georgia has the most counties in the US. It's like 153 counties in the state. Each of them has a different tax rate that since I'm a Georgia business, I have to file individually. I only have to do it annually. Thank goodness. So, and not every county buys from me, but by the end of the year, I'll have, say, 30 individual county taxes that I have to file specifically. If you tell me I have to file one VAT tax quarterly, that's nothing. So imagine a larger company, how much they're already filing. This is not going to be a big deal.

'''Myke Hurley:''' No, because I'm only hearing this as an issue from small companies. Like large companies, there's not going to be a change. I expect this is going to be very bumpy for the next couple of months because there's going to be stuff that's sent before this happened, even though technically that's okay. But when did the purchase occur? I'm in on a bunch of keyboard products that I bought like six to eight months ago. What's going to happen more? There's going to be issues for a while. I know this. There's going to be a bumpy period where like, like you or like many people now listen to the show. This is the first time they've ever heard of this. Yeah.

'''Brad Dowdy:''' I haven't turned anything on on any of my sites yet.

'''Myke Hurley:''' No. And so like there's, and my understanding is the process to apply is not that simple. Surprise. Oh my God.

'''Brad Dowdy:''' It's, it's terrible in Georgia. So I wouldn't expect anything less. And I imagine it's getting overrun right now. Yeah. And I actually need to start collecting any fees.

'''Myke Hurley:''' Yep. So you can do all of the registering and I don't mean, I don't know. And I assume it's going to be tricky and it's not going to be simple and you can have to provide all this documentation and blah, blah, blah.

'''Myke Hurley:''' But it's just going to become part of doing business with the UK. It's up to you as a maker if you want to do that. But I, you know, we're a decent economy. I know it's annoying. It's annoying for all of us. But as I said, I think, I think you as a company, you already know if it's worth it for you. Right. Do you have a lot of UK customers? If you don't, then what's the point? Don't worry about it. If you do, it's probably time to start talking to your accountant and doing some filing.

'''Brad Dowdy:''' Right. Right? So, yeah. Yeah. So I was thinking at it more from a negative from the UK customer base when in fact.

'''Myke Hurley:''' You are going to have to do some customer education, Brad. Sure. Sure, sure, sure. And we do need to see that I'm right in my theory. But what we're not going to, there may be a customs handling fee still, but you're not going to have to pay the VAT. Because that's what we're paying. And people complain to you about customs. They're paying the VAT and then they're paying a fee on top of it. And, you know, so you might have to explain, well, like, you know how you have VAT on everything you buy in the UK. Well, it's the same here now, too. And my thinking on a lot of this sort of stuff remains anyway, that, like, once you've done the currency conversion, because of the way that our economies are structured, the price is, like, the same as if you were a UK company selling it here anyway most of the time. Right? Like, what is a $20 case is a £20 case if you were based in this country. Right. And so considering that there is differences between the currencies of the countries, like, a lot of the time, not all the time, but a lot of the time, it comes out in the wash. Right? Whereas, like, if you want to see what I'm saying, look at, like, technology products. They're always more expensive here. And that's why. Because they're adding the taxes on and adjusting for currencies. So, you know, it's a short-term frustration. But, you know, this is the world my country is in now. Like, we are our own island again. And I was going to say for good and ill, I don't know if, I don't think there's any good. If there's any good, it surely hasn't shown itself to me yet. For ill and ill, this is just where we are. And we're going to, I guess, have to drag everyone along, kicking and screaming now if people want to continue doing business with us.

'''Brad Dowdy:''' Yep. So, this is a bigger conversation and a good conversation for this show because of how Pen Addict shop. Right? We shop with a lot of smaller businesses and larger businesses and have a lot of UK customers if we're businesses, you know, around the world. So, yeah. This might be boring, but I think it's an interesting conversation because we're seeing some changes just in how these types of things are handled. And you might see some changes on your favorite websites. So, just, it's more of a heads up. I have some work to do on my side. I'm not pulling anything. I will just eat whatever taxes I have until, you know, it's completely set. It's not that big of a number to have to worry about for me. But other people might need to, like, step it up and do something quickly because, honestly, these types of things usually don't catch me off. Usually, I'm usually, like, ahead of the game on this one. This one caught me off.

'''Myke Hurley:''' Well, yeah. It's because it was, like, something was going to happen. Right? Because it had to. Because, you know.

'''Brad Dowdy:''' It's not good. But it's not going to affect my numbers enough for me to panic and, like, pull down UK sales. Like, I can deal with UK sales until, like, I put in the 20% type of things. Not a big deal.

'''Myke Hurley:''' It's just the case of, like, if you're a company and you sell, well, maybe stop for a bit. Work out what you could do and then resume it.

'''Brad Dowdy:''' Yep. Yep. Yep. But anyone in the U.S. who deals with state sales taxes, this is no different. In some cases, like in mine, it'll be simpler. In some cases, it'll be exactly the same. Like, a one-stop shop. Right. Okay. Well, that's good. I feel a little bit better after talking to you about it and, you know, realizing how it affects me directly. Because that's really what it's all about, Myke.

'''Myke Hurley:''' Of course. It's the pan addict. You are the pan addict. And so, like, it's just how are you doing, you know?

'''Brad Dowdy:''' Yep. Yep. So, part of the pan addict is answering Ask TPA. I think we're just going to have to take at least half an episode next week to handle our Ask TPA questions. Because we have some really good ones that I want to spend some time on. Yep. So, I think we're at the point now where we just move these to next week. And then I'll probably build up a big batch of Ask TPA. Nice. And just do one of our big catch-up episodes. Sounds good to me. For Ask TPA next week and some follow-up on some other things. Some new product talk, I'm sure. And all that good stuff.

'''Myke Hurley:''' If you do have a question that you want to get in, there's a bunch of ways to do it. You can send out a tweet with the hashtag Ask TPA. If you're a RelayFM member, you can use the RelayFM members Discord. Just use question mark Ask TPA and you can submit your question anywhere. Probably in the Pen's channel is probably the best place for it. But you can choose. It's up to you. You can email us at hello at PenAddict.com. I say us. I mean Brad.

'''Brad Dowdy:''' True. That is true.

'''Myke Hurley:''' Yeah. Those are the ways you can get in touch. If you have any questions you'd like us to ask, any topics you'd like us to expand upon, send them in. We'll do some. We'll do many more next week. We were supposed to do a lot today, but then Jonathan sent me this question and then Brad pasted all that stuff in. And then I spent more time than I would have wanted to over the last 12 hours trying to make sense of this. Same. I think we kind of got to a point where I've been able to work it out.

'''Brad Dowdy:''' Yeah.

'''Myke Hurley:''' Until then, you can find our show notes for this episode at relay.fm slash PenAddict slash 444. You can find Brad at PenAddict.com, knock.co, spokedesign.com on Tuesdays and Thursdays at 10 a.m. Eastern Time on twitch.tv slash PenAddict. Brad is PenAddict on Instagram. Dowdy is on Twitter. I am iMike. I-M-Y-K-E. Thank you so much to Pen Chalet and ExpressVPN for the support of this show. And most of all, thank you for listening. And we'll be back next time. Until then, say goodbye, Brad.

'''Brad Dowdy:''' Goodbye, Brad.

[[Category:Podcast Transcripts]]
[[Category:The Pen Addict Podcast Transcript]]