Brexit Committee Update December 2018

December 2018 update from XMA Brexit Committee.

The latest XMA Brexit Committee meeting took place after the recent vote of ‘confidence’ in the Prime Minister. It is the Committee’s opinion that the likelihood of a ‘no deal’ Brexit increased and as such we are looking to firm up our position in relevant areas.

XMA’s objective is to minimise the effects of Brexit on trading and we are ensuring it does all it can to mitigate the impact of ‘no deal’. The agility and flexibility that XMA is renowned for will stand our business in good stead to help customers and vendors alike.

The British Chamber of Commerce has produced a thorough Brexit Checklist and we have found this a constructive way of enabling us to review all the no deal issues that may arise. The checklist can be found at https://www.britishchambers.org.uk/page/brexit/business-brexit-checklist and we recommend readers of this statement use it for their own preparedness. The checklist provides plenty of links to other official guidance. Your local Chamber of Commerce should also be of help for specific queries.

Workforce

XMA is taking steps to support its EU27 citizen employees – particularly those applying for the EU Settlement Scheme. This scheme is due to be open between March 2019 and 30 June 2021. Further information is available on the Government website, including an employer toolkit.

The future staffing of the business may be affected by UK immigration controls and travel between XMA established countries may also be affected. XMA will look to assist staff with their visa applications (if necessary).

Cross-Border Trade

XMA is ready with customs procedures and has expertise within the business to process imports and exports from/to the EU (as we do with non-EU countries today).

We are still investigating whether any goods are affected by tariffs (controlled goods), but it appears at this time that all IT and Consumer Electronics goods do not attract WTO tariffs. Appreciating that this is not guaranteed to continue, XMA will be training staff to ensure customs procedures can be met.

Potential delays

This is the Brexit Committee’s biggest concern given the general indication is that the British ports and customs processes are not yet adequately prepared for a no deal Brexit. A small delay will potentially cause huge delays to goods deliveries in both directions and non-perishable goods will not be prioritised. As a result, we are looking to take the following steps:

  1. increase the size of XMA’s available storage capacity by working closely with our Tier 1 supply chain partners.
  2. agree with vendors stocking models that will mitigate some aspects of the delays.
  3. ensure that XMA has local configuration facilities in place to mitigate the, at times frustrating, channel tendency to configure a unique sku from the vendor (generally manufactured within the EU at present).
  4. seeking legal advice to assess whether a no deal Brexit can be considered ‘Force Majeure’ when it comes to late delivery penalties/service level agreements. Clearly any delays will be out of XMA’s control however, if necessary, XMA is standing by to amend any contract where time of delivery is the essence.
  5. working closely with our parent company (Westcoast) to investigate stocking capability within Westcoast’s Irish facility, where goods will be held as necessary to ensure a next day service to Irish customers continues. Westcoast’s courier to Ireland will increase its ability to ship via Northern Ireland where necessary.
Tariffs

XMA is reviewing the HS (international classification system) codes for all products we sell/distribute. It appears that there are no tariffs on most goods at present, although with current trade barriers being erected between the USA and China, continued vigilance will be required.

All import or export tariffs will be passed on through price increases from vendors or increases from XMA. This is in line with XMA’s existing terms and conditions of sale.

Rules of Origin

We understand that all XMA manufacturer suppliers are responsible for determining the source of their goods, yet we are writing to all to verify they are able to produce evidence upon request. As the manufacturer of Viglen products, XMA can evidence the source of all of our goods.

Other Customs points

XMA is not currently a member of an HMRC trusted trader scheme. We are assessing whether this would be advantageous, yet XMA is already fully conversant with Incoterms and Intrastat reporting.

VAT

Our parent company (Westcoast) has all necessary country specific VAT registrations to support customer purchases based all over the EU. Their in-house VAT experts are assessing any import VAT issues, yet most imports fall outside the thresholds.

Currency

XMA has a currency fluctuation policy and significant movements are passed on to the customer. We anticipate significant fluctuation in case of no deal, leading to significant and immediate price rises from vendors. XMA will ensure such rises are well communicated with as much notice as the vendor allows.

Intellectual Property

XMA hold UK Trademarks.

Contracts

A full review of customer contracts where EU law/EU geography is specified is underway.

EU Regulations

Notwithstanding EU regulations will cease to have direct effect on the UK once it leaves the EU, the UK has taken steps already to transpose most EU regulations into English law in any event (e.g. personal data or waste packaging). We therefore do not anticipate a material effect on the UK’s ability to comply with matters such as safety or transfer of personal data post departure from the EU.

Competition and State Aid

Changes made to competition regulation are unlikely to affect XMA or its business practices in the short term.

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