Brexit: Now What? Part IV

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The Don said:
http://www.bbc.co.uk/news/uk-politics-44229606

If it goes the way of any other large-scale IT and technology project in the public or private sectors then I'd expect those timescales and costs to double or triple at least.
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I'm somewhat sceptical of the claimed £17bn cost for businesses drawing up customs declarations - will British businesses really be employing c half a million more people to add a page of paperwork for each delivery?

All this is based on the "cost" of a customs declaration being £35 - I think the last customs clearance fee we paid to an agent was £12.

The more outrageous claim is that the cost of customs partnership model will be "zero or less". The cost may be zero if the UK keeps the same external tariffs as the EU, but if any tariffs are reduced eg Kenyan beans then I suspect that the cost will be the whole difference in tariffs, based on experience in trying to get a refund from HMRC on customs related stuff.
 
Aber said:
I'm somewhat sceptical of the claimed £17bn cost for businesses drawing up customs declarations - will British businesses really be employing c half a million more people to add a page of paperwork for each delivery?
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No, which is why the scheme is doomed to failure if that amount of administrative effort is required.

Aber said:
All this is based on the "cost" of a customs declaration being £35 - I think the last customs clearance fee we paid to an agent was £12.
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That's just the fee, there's also the cost of preparing the paperwork, collecting whatever supporting documentation is required and keeping track of it all.

My business is very simple to administer but it still costs £1000s in administrative costs to keep track of VAT, corporation tax and so on. If we also need to produce customs declarations for all of our EU business (100% of our non-UK business and the majority of our work overall) then that's more administration.

Aber said:
The more outrageous claim is that the cost of customs partnership model will be "zero or less". The cost may be zero if the UK keeps the same external tariffs as the EU, but if any tariffs are reduced eg Kenyan beans then I suspect that the cost will be the whole difference in tariffs, based on experience in trying to get a refund from HMRC on customs related stuff.
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You won't find me defending the customs partnership model. It seems to be passing the pain and cost to business. It's as pie-in-the-sky as the other ridiculous scheme. :(
 
Lothian said:
Only on non-EU supplies. There will be a price increase in imports from the EU and EU customers will pay tariffs on our exports.
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My working assumption that the whole point of the "customs partnership" is that it would allow tariff-free trade between the UK and the EU.

The major risk from the EU perspective of tariff free trade with the UK, is that UK will import (at lower tariff rates) from 3rd countries, and export the same goods to the EU with no tariffs applied, so side-stepping EU tariffs.

One way to prevent this is for all UK exports to the EU to have a detailed list of component origins to show that they were not imported from third countries. The "simpler" way is for the UK to collect EU tariffs on all imports from 3rd countries, and then rebate tariffs to UK companies who can show that the goods were consumed in the UK.
 
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The Don said:
No, which is why the scheme is doomed to failure if that amount of administrative effort is required.

That's just the fee, there's also the cost of preparing the paperwork, collecting whatever supporting documentation is required and keeping track of it all.
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The numbers are misleading as £35 might be the "cost" for producing a 1-off document.

However in reality computers take care of producing multiple documents from the same underlying information, at negligible marginal cost eg processing a sales order will automatically produce a picking list, a dispatch note AND an invoice. Adding customs information should not be that difficult, especially for those with large volumes of transactions with the EU.
 
Aber said:
My working assumption that the whole point of the "customs partnership" is that it would allow tariff-free trade between the UK and the EU.

The major risk from the EU perspective of tariff free trade with the UK, is that UK will import (at low tariff rates) from 3rd countries, and export the same goods to the UK with no tariffs applied, so side-stepping EU tariffs.

One way to prevent this is for all UK exports to the EU to have a detailed list of component origins to show that they were not imported from third countries. The "simpler" way is for the UK to collect EU tariffs on all imports from 3rd countries, and then rebate tariffs to UK companies who can show that the goods were consumed in the UK.
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Both 'solutions' sound like an administrative nightmare
 
Aber said:
The numbers are misleading as £35 might be the "cost" for producing a 1-off document.

However in reality computers take care of producing multiple documents from the same underlying information, at negligible marginal cost eg processing a sales order will automatically produce a picking list, a dispatch note AND an invoice. Adding customs information should not be that difficult, especially for those with large volumes of transactions with the EU.
Click to expand...

I guess we'll see. The technology which is supposed to underpin this whole model is largely hypothetical at this time.

If the whole exercise is automated, there are still costs associated with running IT systems, the manual procedures around them and so on.
 
Aber said:
The numbers are misleading as £35 might be the "cost" for producing a 1-off document.

However in reality computers take care of producing multiple documents from the same underlying information, at negligible marginal cost eg processing a sales order will automatically produce a picking list, a dispatch note AND an invoice. Adding customs information should not be that difficult, especially for those with large volumes of transactions with the EU.
Click to expand...

In a perfect world producing documentation might work like you describe above. The reality is however that for a lot of small and medium sized companies it isn't that simple. They don't have the software that allows all those documents to be processed together and even if they do, there's no guarantee that their software would allow an upgrade or additional module that processes customs information.
 
The Don said:
I guess we'll see. The technology which is supposed to underpin this whole model is largely hypothetical at this time.

If the whole exercise is automated, there are still costs associated with running IT systems, the manual procedures around them and so on.
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Presumably it will use the same technology used for customs declarations from non-EU countries?

Whichever way it is done £17 billion as a cost is seriously misleading. Although I might just investigate starting up a customs clearing business...
 
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Aber said:
Presumably it will use the same technology used for customs declarations from non-EU countries?

Whichever way it is done £17 billion as a cost is seriously misleading. Although I might just investigate starting up a customs clearing business...
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Your whole argument seems to boil down to "because technology."

Fascinating.

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Aber said:
Presumably it will use the same technology used for customs declarations from non-EU countries?.
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Not at all, it's supposed to provide "invisible" customs, as opposed to the current system for non-EU which relies on visible customs.

Aber said:
Whichever way it is done £17 billion as a cost is seriously misleading. Although I might just investigate starting up a customs clearing business...
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So you say - I'd tend to go with the experts but I realise that approach is so last century.
 
Aber said:
My working assumption that the whole point of the "customs partnership" is that it would allow tariff-free trade between the UK and the EU.

The major risk from the EU perspective of tariff free trade with the UK, is that UK will import (at lower tariff rates) from 3rd countries, and export the same goods to the EU with no tariffs applied, so side-stepping EU tariffs.
Click to expand...
My assumption was that the "customs partnership" idea was dead in the water, as it effectively prevents parties from negotiating different deals with 3rd countries. As we know we are desperate to get a different better deal with Burkina Faso than the EU has and are willing to leave the EU and the associated benefits to get it.

One way to prevent this is for all UK exports to the EU to have a detailed list of component origins to show that they were not imported from third countries. The "simpler" way is for the UK to collect EU tariffs on all imports from 3rd countries, and then rebate tariffs to UK companies who can show that the goods were consumed in the UK.
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Those are both financially not a sensible option. Probably on the "serious consideration" list.
 
Aber said:
Presumably it will use the same technology used for customs declarations from non-EU countries?

Whichever way it is done £17 billion as a cost is seriously misleading. Although I might just investigate starting up a customs clearing business...
Click to expand...

Presumably companies that have few - if any - deliveries from non-EU companies will deal with them manually on an ad hoc basis. Those who have a system in place to deal with larger quantities of non-EU deliveries will be already set up. The problem will be fior thsoe companies in the first category who have a much-larger amount of deliveries of EU origin. They will be the ones who will have the addded huge expense of "now" dealing with customs declaratiosn for them.
 
ceptimus said:
As usual, you're all willfully missing my point. I never said that a border like the Swiss one was needed. What I actually posted was that the Swiss Head of Customs told a committee at Westminster that, in his expert opinion, it would be possible for the Irish border to be "invisible" after Brexit.
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You appear, as usual, to be ignoring the provisos that were attached to that opinion, those regarding cost, implementation time, economic effects, staffing et cetera. Not to forget the political issues which, again, you've conveniently ignored.
:rolleyes:
 
Aber said:
Recent status report on the technology

https://publictechnology.net/articles/news/work-customs-system-track-vows-hmrc-chief
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That's not the technology for the "invisible" borders, that's just scaling up the existing rules and technology to the new levels of demand. Apples and Oranges.

As someone who has been intimately involved with several large-scale government projects, I'd take that traffic light with a huge pinch of salt too. *Something* may be delivered on time, but whether it's fit for purpose is a different matter.

edited to add...

“an amber/green rating” - is project-speak for utterly-****** but we're not brave enough to admit it yet.
 
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The Don said:
I guess we'll see. The technology which is supposed to underpin this whole model is largely hypothetical at this time.

If the whole exercise is automated, there are still costs associated with running IT systems, the manual procedures around them and so on.
Click to expand...

Because the Govt have such a good record with large IT projects.

There is no chance that any IT will be anywhere near ready.
 
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