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EU/Brexit Situation – 26th January 2021

26th January 2021

 

We are now 3 weeks into discovering how our new processes need to work following the UK’s departure from the EU.  It has certainly been a busy 3 weeks and we have already made great progress on establishing what the new methods need to be and how we can support our customers.

There are many positives that we now understand from the information we have so far.

  • Duty: A deal was made on 24th December between the UK and the EU, which means the majority of our products flow without Duty applied to them throughout the EU.  This was the biggest concern throughout all of the Brexit negotiations as these are fees that cannot be recuperated through any method.  We have reviewed our tariff codes and outlined below the products that will have small amounts of duty applied to them.  The Duties are minimal and these products make up a very small amount of our product portfolio.

DPA

2.0%

EP Products

2.0%

FC Products

Variable

Gasket

2.0%

IO-RM-1 Relays

2.0%

VA

2.0%

VR

2.0%

VZ

2.0%

  • Deferment: It has been identified by setting up an EORI code and deferment account with DHL, VAT payments to release shipments is not required. In fact, a number of customers are ahead of the game and have set this process up already and shipments are flowing as before.  They are not required to pay the VAT to release their shipments and are not incurring admin fees either.  We would encourage customers to ensure they have this procedure setup and have given us their EORI number as we must include this on the waybill to ensure the process works.  This is a clear way through the stumbling blocks we have had in recent weeks and provides a positive outlook for the future.  Please note that it is the customer’s responsibility to setup the deferment account with DHL as it has to be done at a local level.  

Some of our customers have asked why we are not using the Sontay Europe option that we started to look at around 3 years ago.  Here are some points as to why this was not used.

  • The previous communications stated that it was a plan in the case of a “no deal” Brexit.  We do in fact have a deal which covers the Duty side of things so this is part of the reason it is not the option chosen to take us through this period.
  • We employed a specialist Export Consultant over 2 years ago to look at our options and a recommendation was made that we do not use this option and work with DHL to fulfil our needs post Brexit.  There are many reasons for this such as:
    • Duplicate stock levels needed to meet requirements.  We would not be able to carry the range we have in Edenbridge in another warehouse and would undoubtedly not have what the customer wants when ordering. 
    • Risk to order picking and packing accuracy and control.
    • Inability to make serial tracking of our products.
    • Vast cost of using such a facility as a business case.
    • Increased workload to internal teams who are now under even more pressure working remotely.
    • The unknown as to how the initial processes will settle down.
  • Since the deal was made, we still believe the correct decision has been made.  As the vast majority of products have no Duty applied, any EU facility would only be to cover customer VAT which can effectively be claimed back by the customer and the process managed through EORI codes and deferment accounts.
  • The issue of managing 2 warehouses is further compounded whilst working though a pandemic with issues on staffing levels due to isolation and sickness.  This would prevent us from being able to adequately stock any additional warehouse.
  • The inability to travel to any EU hub for setup and training would also make the setup of any additional hub impossible at this time.

We understand that the process for receiving shipments can now be different to before Brexit.  However, we are doing all we can to provide solutions to our customers and help them through any teething problems there may be in the new ways of doing things. 

The Sontay Team are extremely experienced in international shipping and are able to offer help and guidance wherever needed.

If you do have your EORI number setup, please pass it on to us so that we can add it to your future shipments.

We wish all of our customers to keep safe and well in these most difficult times.  We can get through this together.