Shipleys LLP

Chartered Accountants and Professional Business Advisers

Identity Direct

Identity Direct Ltd is a family owned business, headquartered in Australia. It began trading in 1992 as a mail order business after developing a small library of personalised children’s books. Since then the business has gone from strength to strength. “Over the past 20 years we have grown to the point where we now have a turnover of approximately £12m, marketing an extensive range of personalised products in Australia, New Zealand, the UK, US and Canada,” explains Tom Greene, Managing Director.

Famous names

Tom attributes the success of the business to “our uncompromising commitment to product quality and customer service, and building key strategic partnerships in each market”. The past seven years has seen Identity Direct make the transition from a traditional mail order company to a more e-tailer based model, with almost 75% of customer orders placed through its global websites. The company has also developed licensing arrangements with organisations such as Disney, Marvel, Nickelodeon and Sesame.

UK appeal

The UK consumer market was the next logical step for Identity Direct. The core personalised children’s book product was easy to migrate into the UK because of “the language base, a high population with a relatively high disposable income and a strong heritage as mail order buyers who were early adopters of the internet”, says Tom.

Tax challenges

Tom says the most difficult challenges of breaking into the UK have all been a consequence of VAT-related issues. “Our books were zero rated for VAT and as the product range grew, we continued to manufacture and ship products using international direct entry procedures of postal networks where VAT was payable to customs on any product which had a value in excess of the mail order importation value threshold at that time.”

This approach worked well for Identity Direct for some years, but changing consumer expectations – mainly as a result of internet shopping and a desire by our customers to receive products faster – led to the decision to start manufacturing products in the UK.

“To set up in the UK, we had to seek EORI permits for base stock being imported from China and other markets. We also had to establish full VAT-reporting capabilities, which our systems were not equipped for.

“Shipleys has helped the business by providing an understanding of the pluses and minuses of the structural options available and assisting with implementing the decisions,” explains Tom. “They provided us with appropriate tax advice, attending to VAT registrations and giving us guidance on how to lodge our VAT returns, which was crucial at a time when we were both manufacturing in the UK and shipping into the UK from our New Zealand manufacturing plant.”

Future opportunities

Looking to the future, Tom views the internet as an ongoing challenge for Identity Direct, giving global market access to any marketer, and the rapidly reducing cost base of digital printing and design, removing many barriers to entry for competitors. At the same time, he sees it as providing “unlimited opportunity to accelerate growth, and leverage existing investments in products and infrastructure”.