Month: November 2020

Brexit …..aaargh….Jan 1 …brrr…Customs… aaargh !

Posted on by markybrett

Over the last four years , I have tried as much as possible not to post about Brexit. However, from a purely practical point of view I have relented, in the hope I can inform in an apolitical way.

Unbiased (I keep biting my lip even when I only write those words), I am going to try and put some of facts down which will hopefully inform traders who have been buying from suppliers within the EU, on what they need to do. I would like write about exporting to the EU , but that is even less clear and to be honest my interest is in stuff coming from the EU.

So lets start with some facts. There are 11,000 containers of UK Government PPE at Felixstowe docks. Ships coming into both Felixstowe and Harwich have been subject to delays for some time now. The Customs IT systems are not fully tested yet. Every UK point of entry ie ports & airports invariably run different types of software for customs declarations . It is muted there will be all singing, all dancing single system by 2025 . No matter whether there is a deal or no deal on Jan1 2021 things will change big time. If you did not really understand the words ‘free movement of goods’ you will then .

What’s to do then ? If you import absolutely anything from the EU or intend to then the following 2 steps are essential.

  1. Apply for an EORE ( pronounced by HMRC as EOREE. Well at least someone has a sense of humour or irony) .
  2. Apply for deferred Custom Declarations and Vat payment
Eoree -Amused me !

You have to do No 1 before you No 2 (that may chime with some- schoolboy humour). You can only apply for 2 if you have not been a naughty person with HMRC. If you are having difficulty loading the HMRC site to download this form, it maybe the browser, as it only works on certain browsers. But HMRC Help Line doesn’t seem to know that. It also doesn’t explain the forms you may or may not need. The one that you probably do is called C1202 as it is a direct debit mandate for HMRC. Without this you are unlikely to get approved . Here’s a good ‘un, you have to complete the form online but then you have to print and post it. This implies that they could have anywhere between 100-200,000 postal applications between now and Christmas, which they will then have to handle manually. Having just had two weeks locally of no postal service, the signs are pretty ominous.

If your application for deferred status is confirmed it allows you to do 2 things …

  1. From the Jan 1 to June 30th you can defer making your customs declarations. But you must keep a record of all your transactions during that period. I will itemise the data you need later.
  2. Whilst in the EU there was an agreement that all VAT transactions between states did not carry VAT on the invoice. This stops on Jan 1. From then on, there will be no VAT on an invoice from an EU supplier but you will have to record the VAT that would have been due on that same invoice in your VAT returns.

The Following list are the core items you will need to record for customs declarations :

Customs Procedure Code

Supplier

Date

Consignment no/ Invoice no

Product code

Description

Tariff code

Tariff Rate

Cost Price

Quantity

Total Due

Without doubt I will have missed certain elements but these are the basics. If a deal is reached, I get the impression that declarations will still have to be made as to what they contain is another matter . One thing is for certain is that you will have to record the Vatable amount as that will certainly be due on July 1. I cannot speak for the Northern Ireland Protocol, as that is another layer of political customs speak. Nor do I have any knowledge of specialised products such as plants , food, oil, gas, aero engines, airplane parts, chemicals, drugs………All of which I assume comes into the definition of oven ready deals.

None of this helps with the importing from nations not in the EU but have free trade agreements with the EU. There are fifty plus such nations . We have made a couple of deals notably Japan, Switzerland , Norway and Iceland but there are a number of significant trading nations where we will no longer have a free trade deal such as Mexico, Vietnam and Turkey. And I am not so sure there is a lot of help available. There are grants for training on customs procedures and there are also grants if you want to set yourself up as a Customs Agent ! I think that in itself tells a story. There are also many HMRC webinars . Having recently sat through one , I would not raise your hopes of celestial enlightenment . Maybe others are better .

I lied. At the start I said I was going to be apolitical . I have been . Now I am not. The UK Government has been floundering about in very deep waters dealing with Covid. So has every other National Government. No matter what shade of political belief , no Government would have got it right. It is one of life’s undeterminables. And it will continue to be so. The Government has a duty to preserve and protect the lives of its citizens. Where there are definitive actions that could be taken they should take them.

Which brings me back to Brexit. I am a remain voter accepting of the UK decision to leave. What I cannot agree with is reckless political ideology that puts our nation in harms way or at very least increases the risk to both health and wealth. One of the underlying principles of paying off the huge debts that have been incurred (quite rightly) is the returning to some form of economic growth. Even (at least most ) political Brexiteers agreed that the first months of Brexit would be very hard on the economy, and that was pre-covid. Consequently , I get very wound up by superficial ads with actors, apparently in large warehouses, saying we are ready are you? When they, the Government are very evidently not. Moreover, how would you expect hundreds and thousands of businesses that have currently got to deal with more economic, financial and emotional hurdles to deal with than at any other time since the 2nd world war .

So please tell me UK Government why you have chosen not to doing anything about the one thing you did have control of ie Brexit Transition you chose to stick with political ideology . That is to say you kept your snouts well and truly stuck in a political bucket . Take back control , whatever that means but do so when you when can at least see the steering wheel. As a consequence we can look to at very least six months of even more supressed if not depressed growth rates. Ta very much .

You’re Toast…..

Posted on by markybrett

Plagues, pestilence, pandemics,post apocalyptic scenes of retail destruction, are not for here.

During the last fifty years there has been an extraordinary period of massive technological development. From communications and computerisation , through travel to medicine , entertainment and so many areas that impact our everyday lives . You can turn the central heating back on at home via your smart phone from the other side of the globe.

It feels that every day brings an announcement of some monumental change. Electric, self driving cars, electric planes, robot surgery , it is ceaseless. Yet there is one area which remains exactly where it was fifty years ago. Technology has been defeated by the humble slice of bread. Nothing, absolutely nothing, de nada…. has changed.

Yes, a few extra dials have been added on some models . Now you can toast your Bagel on a Bagel setting. You can defrost your bread on a defrost setting. But they are only cosmetic. In reality they are just words on the dial as they are only timing setting that have always been there. They, all, still just toast and not very well, like what they did before . We wont even go to the Commercial Toaster. Yes we will.

That worse than useless bit of kit that they have at buffet breakfasts in hotels, that creates long queues, where you have to write your name (in case somebody nicks it) on the bread because you will have to go around at least twice, and then by the time you get back to your table, hottish, vaguely brown toast has become cold and soggy.

Commercial Toaster

Where are the Elon Musks, Steve Jobs, James Dysons of the Toaster World ? Is it because it ain’t sexy like electric cars, iPhone and Vacuum cleaners . If so what is sexy about a Vacuum cleaner ?

The UK market, alone, is worth about 5 Million toasters a year (this, apparently does not include Commercial toasters). The world market has an approximate value of £1 Billion. So it is a toasty (sorry weak pun over tasty) market. One issue maybe the potential returns. In the early sixties the price of a toaster was about £6 (not much different to the average minimum wage). Yes, you can still buy a toaster for £6. Yet that did not stop Dyson making an amazingly expensive vacuum cleaner ,with which you don’t even get any bags!

That said, if we assume that six quid was just about a weeks wage, today you can buy a piece of kit (drone) that you fly remotely, drops bags of drugs into prison yards, film your neighbours unruly kids from a great height (or worse) or fires high powered missiles into unsuspecting enemies from 6000 miles away ( I know they cost a bit more than a weeks wages) for much the same sort of money.

Hands up we are a fifty quid toaster couple. Yes, ours can toast 4 slices , heat bagels, defrost bread and lasts 9-10 years (average toaster life is 4-5 years) but we cannot guarantee that the bread gets toasted in the same way every time. However, the sixties toaster could do all that except toast 4 pieces. That’s toaster innovation for you.

This week alone there has been the announcement of speakers that you can hear, and you alone. Yes, four ( is that allowed) of you can sit in a room and it creates an audible bubble that only you (whoever you is ) can hear the speaker- no head phones ! Don’t ask , I don’t know . What I do know is I can put a slice of bread in my toaster and I have no idea what it will look like until it has popped up. Maybe toasting is more exciting.

Chaos Theory……..

Posted on by markybrett

I will not patronise those highly intellectual individuals who read this post with an explanation of Chaos Theory. However, for the odd fish that slips the net and needs a quick explanation, see below

Chaos theory is a branch of mathematics focusing on the study of chaos—states of dynamical systems whose apparently random states of disorder and irregularities are often governed by deterministic laws that are highly sensitive to initial conditions. Chaos theory is an interdisciplinary theory stating that, within the apparent randomness of chaotic complex systems, there are underlying patterns, interconnectedness, constant feedback loops, repetition, self-similarity, fractals, and self-organization. The butterfly effect, an underlying principle of chaos, describes how a small change in one state of a deterministic nonlinear system can result in large differences in a later state (meaning that there is sensitive dependence on initial conditions). A metaphor for this behaviour is that a butterfly flapping its wings in China can cause a hurricane in Texas

Directly from Wikepedia

As everyone is entirely cognisant of the above, you can of course transpose the butterfly in China to Bat Coughing in China and causing a world health crisis. And for those who have forgotten the Chaos theory formula (why would you?), it is as follows:

There are alternative formulas but this is a useful starting point. Any one of us will at some point think that life is chaotic at least once a week. Yet that Chaos, will be something like your home is a mess, you don’t whether you are coming or going ‘cos the kids are driving you mad, the dog has just ‘pooed’ in your bedroom, your partner is working late again and the oven is broken.

I would like to be slightly more theoretical and point in the direction of the Chaos Theory may have some impact on your business and as likely your life in general.

A fictitious example staring with the humble wasp …….

Someone is relaxing in their garden, in summer, having a drink. A wasp pops down and stings said person. Said person has an anaphylactic attack and is seriously unwell. The said person is the leading heart surgeon in the US. That afternoon they were about to perform major and urgent surgery on the US President. There is no replacement . The President dies. Wall Street plummets, the dollar crashes, reverberating around the world. There is a run on the banks . Nobody is in control……

I can hear the cry, but there are checks and balances to correct this sort of event ! Maybe, maybe not, but that is the point , if there are there then they exist because of the existence of Chaos Theory. Most major organisations have teams who are continually running disaster scenarios and calculating what to do if they were to happen .

Or you would like to think they would. The current situation we are all faced with is a Chaos theory starting with the humble bat.

“The impact of a huge epidemic, like a flu epidemic, would be phenomenal because all the supply chains would break down. There’d be a lot of panic. Many of our systems would be overloaded,” ……”But being ready for epidemics of different sizes, there’s a lot more we should do.” 

CBS News Bill Gates Davos 2017

Few took note . In the last couple of weeks the Chairman of Trailfinders, a UK travel company, announced the company could last 2 years without a booking. Why? Simply because there was £300 million in the bank. Other travel companies said that this was very impressive but he was fortunate to have such cash reserves . Not quite so straight forward…..

Trailfinders from our seemingly pathetic little start-up in 1970 opened two bank accounts. One for our clients’ money and one which belonged to us. So we knew exactly which monies were ours and which were entrusted to us. I have also set aside large reserves of cash from past profits to guard against doomsday scenarios. We have been able to refund our clients while we wait to recover your money from Airlines in the present hiatus. We have honoured our unique Financial Guarantee even where Airlines have already gone into administration, taking the risk we will get it back ourselves.

Mike Gooley October 2020 Chairman & Founder Trailfinders

It would be a futile exercise to examine any governments responses, as despite warnings over many years there is little evidence that any substantial planning had been done. There is much evidence to illustrate the complete opposite.

Government’s, Institutions and commercial organisations of all types ignore the threat of Chaos, if whatever form it takes , at their own peril. We have a personal responsibility which is limited by resources, wherewithal , and education . For those who are encumbered by these restrictions, are reliant upon the very institutions, whether they are instruments of government, charities or their immediate community, that should have been considering Chaos in whatever form it appears, to come to their rescue.

Lets be quite clear, Chaos creates plenty of winners, albeit far less in numbers than the losers and in the most part far more privileged, a certain type of politician, hedge fund managers, currency traders, and market shorters to name but a few . If we accept we are in the midst of some form of Chaos now there will be those who will be benefit from it and not necessarily in a bad way. For example as some organisations will fail others will be created to take their place. However, somehow attention must be paid to those have suffered through no fault of their own. But history tells us that is unlikely to happen. Its a bit like the annual bush fires that burn all the dying grasslands, to be replaced by fresh growth. It does not take into account the price paid by those who suffer some form of loss, either in terms of wildlife or even personal loss.

In the midst of Chaos, there is always opportunity

Sun Tzu (shame his book is about War)

Simply speaking, I see three groups of approach . Everyone and every organisation will fall into the broad spectrum of anyone of these three. We can see all three variations within our current Chaos.

  • Those that can and should look at ways of mitigating negative impacts of potential Chaos (in whatever form)
  • Those that seek chaos and look for opportunities, for good or bad
  • Those that are unable to do either and look to those in the first category, in the hope that they offer assistance and guidance, when needed.