Brexit Committee Update August 2019

Brexit Committee News Update – August Update

Brexit Committee News Update

Given that we have experienced a period of lull whilst the new government takes shape – the direction of travel now looks clearer – we are heading for a ‘No Deal’ Brexit at pace and hence all advice from government and business organisations is to prepare for a hard Brexit.
Seeing as XMA were making such preparations in March – management’s thinking is much the same and our Brexit committee met earlier to set out what we must do internally and to advise our customers on steps they can take to mitigate the effects on their business.

CBI & BCoC Advice

The CBI has produced a long document setting out the effects and the preparedness of the UK, the EU and the UK & EU together. A copy can be found here. In essence, it shows that the UK is better prepared than the EU but both are woefully under-prepared for 31st October. In addition, the fact that the new Brexit day comes at the height of the Black Friday and peak retail periods, poses more dangers for logistics businesses.

The British Chamber of Commerce has also set out a neat Risk Register as an update to their Business Brexit checklist.

This simple checklist will act as a good guide to ensure that XMA and our customers are considering the right areas to prepare for the difficult time ahead. Most areas are rated red.

People

Leadership is important here and XMA are ensuring that all EU nationals and their families employed by XMA are assisted in complying with the EU settled status scheme. We urge our customers and vendors to do the same. Perhaps the one area that the new government has softened is immigration, with no talk of reducing immigration but merely being able to control it.

Funding

XMA do not receive EU funds but this appears more positive for those that do.

Tax

It appears that the UK government will introduce a relaxed approach to VAT deferment on imports and exports for a period not less than 1 year. This will reduce any cash flow burden on XMA and hence our customers.

Regulation

Given that XMA and our parent company (Westcoast’s) goods are also sold in Europe, we do not anticipate any disruption to supply as a result of either UK or EU regulatory divergence post Brexit. Clearly this could change in the future but should not affect trade in the short term.

Data

The UK government will impose a limit on mobile roaming charges incurred in EU countries. This is not the case for EU tariffs in the UK. Data governance under GDPR has been adopted by UK law and is currently EU compliant. A ‘No Deal’ scenario is unlikely to alter EU data compliance although businesses should be alert for divergence.

Trade

There are still no tariffs anticipated on almost all goods and services sold by XMA under WTO rates at present. Clearly XMA will keep this under review in light of US/China tensions. However, neither the UK government nor the EU are likely to impose import tariffs on IT products.

Borders

This is where a ‘No Deal’ situation will have the biggest impact on trade. Whilst the British government are increasing spending on ports and customs officials as well as promising speedy entrance of goods from the EU, imports will still be dependent upon accurate paperwork. The Westcoast Group are spending time ensuring that appropriate information including commodity codes are available on shipping documentation. At present over 90% of codes have been collected and systems are being updated to ensure they are available when required. The EU have made no such arrangements and hence may well levy fines for inaccurate paperwork as they do for imports from outside the EU today.

Despite all the plans, delays at port are still anticipated by every logistics company that XMA have spoken to. XMA and Westcoast’s management are working with vendors to increase stock holding over the difficult peak period to avoid short term shortages. In addition, our new warehouse in Andover will more than double capacity and allow for increased stock holding. However, we urge customers to take the following steps:
i) Engage with XMA account managers to predict large roll-out orders in November/December to give earliest visibility to ensure goods are available in the UK.
ii) Switch selling from Configure-To-Order (CTO) stock built in vendor factories to channel inventory as soon as possible
iii) Where this is not possible, ensure lead times are managed with end-users to factor in delays at port

Ireland

Assuming that the UK exits the EU without a deal, the Irish market will be affected significantly given the border complexities. Westcoast’s warehouse in Tallaght is only sufficient for roll-out management and Westcoast do not anticipate making this into a fully managed warehouse at present – i.e. most goods will still be shipped from the UK and will be subject to border delays. Irish customers should engage with their XMA account managers to ensure stock held in Tallaght is forecast and distribution can be managed effectively.

FAQ’s

EORI – Westcoast do have a UK EORI number which will be sufficient for all declarations
AEO – Westcoast have not applied for this status as management consider this will not be effective in speeding up customs procedures
TSP – Westcoast have now received this accreditation from HMRC
Warranty – No vendor has as yet amended their warranty terms so we can anticipate that warranty procedures will be the same as currently available post-Brexit
VAT – Exports on goods shipped from the UK will not bear VAT from the UK as currently
Tariffs – Where they exist will be applied on the full price of the goods (i.e. before discounts)

For any questions or queries contact our XMA Brexit committee at approvals@xma.co.uk

Read previous Committee Update for March 2019