Remember what your granny said? If it’s too good to be true, it probably is

Hello, David here again.

My last post attempted to highlight some of the weaknesses of the Border Operating Model.  It is undeniable that the government proposals are full of holes and impracticalities.

Given the very real nature of these deficiencies, it is impossible to see how any freight company would be able to confidently claim that they are completely ready for Brexit.  Even the government still cannot clearly state the position, given that we are informed that version two of the Border Operating Model is due for release in October.

It would be difficult to see how any company could claim to be Brexit ready when the operational model is still a work in progress.  Importers and exporters need to be able to trust their provider and as such, I would be incredibly nervous were I in the shoes of any operator who claimed to have a clear and absolute solution.  Offering something on the lines of a frictionless border is surely impossible if you can’t define the process or legal framework within which you will be required to work.

What I will say is that misinformation abounds.  We are seeing an awful lot of claims and suggestions by operators and government alike that turn out to be misleading or unrealistic. Just take the now-defunct TSP for an example.  In a difficult time, we all want to be told there’s an easy route.  That things won’t be any different for our supply chains and we won’t have to worry about change.  Unfortunately, in this case, change is inevitable and preparing for it correctly and professionally is important for a successful continuance of the business. 

It is my firm belief that we are all a bit more grown-up than to be taken in by wild claims that a miracle solution to avoid delays exists.

Please don’t view this as overly pessimistic.  Planning will alleviate the worst of the changes.  But there is no silver bullet.  A reality check is needed, I feel.  Nobody can be fully ready for a system which remains to be fully decided.

The fluid nature of the situation leads to an inevitable lack of preparedness.  Transit delays will occur as a result.  Trade flow will not be frictionless, even for the best prepared.

Transit times will be impaired by the least prepared, thereby impacted even the best prepared.  You can’t helicopter a truck out of the middle of a queue of 7,000 lorries.

Oh – and on a technical note, be careful of the dubious claims doing the rounds about the ability to zero-rate VAT.

VAT rating is not within the purview of anyone other than a governmental authority.  All exports are automatically zero-rated for VAT, provided the correct Customs procedures are followed.  VAT rating on imports into the EU or on imports into the UK is a matter for local state governments, not transport companies.  Whereas some goods are zero rated on import, most aren’t.  Naturally, any party paying VAT and any other relevant taxes on behalf of another will want the security of knowing those taxes will be reimbursed.

Finally, a word to the wise.  When it comes to costs, always look at the small print.

Things are seldom as straight forward as they seem.

All that glistens is not gold.

David

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