Local businesses being hit by EU rules

Case studies show that Hartlepool is losing trade thanks to being members of the European Union, according to an MEP who has worked on behalf of local businesses.

North IT is a small Hartlepool-based firm supplying digital services and app development to businesses and customers as far away as Australia. But for the last year it has been unable to trade with our closest neighbours in Europe, thanks to European Union regulations which were introduced last year.

Managing Director Paul Jenkins explained how his business has suffered:

“Most consumer app purchases are for very small amounts of money. We rely on selling large quantities, so collecting the necessary data for each sale – and changing our prices depending on the VAT rate applicable in each country – is problematic.

“Because of the huge technical problems this creates for automatic purchases, the new rules effectively prevent us doing business with EU countries.  Our estimate is that we lost 5 to 10 percent of our turnover almost overnight.  It would take more time to work out a VAT bill than it does to develop an app!

“We do still trade internationally outside the EU. It’s not just my business that’s been affected; many other companies in this sector are saying exactly the same,” he said.

Jonathan Arnott, the North East’s UKIP Euro-MP, visited North IT to hear more from the business.  He has been an outspoken campaigner against the new regulations, known as VATMOSS.  He has raised the issue of European Union VAT regulations in the European Parliament and with the European Commission, but there is little sign that anything is going to change.

“Under the new rules, whenever you trade with customers elsewhere in the European Union, VAT is chargeable at the local rate. If your business doesn’t pay VAT on a product at present, then you have to increase prices by as much as 27% for certain countries, making you uncompetitive, whilst adding to your accounting workload.

“In North IT’s case, the situation is even worse for technical reasons. They rely on automated purchases, but you can’t always prove which country your purchaser is in until they’ve submitted card information to buy the product. And that affects the price they have to pay.

“It would be comical if it weren’t so sad.  Because we’re in the European Union, they can’t afford to do business with other EU nations. Once again the European Union is harming our economy and hurting a local Hartlepool business.  It’s time to leave the European Union and end this bureaucratic nightmare.”