Message from ARC to our customers in the E.U.

Some of our customers in Europe may be aware that there are transit delays for orders shipped from U.K. into Europe.

Keeping this in mind, we request our European customers to place their orders through or website by 23rd December 2020. All such orders will be processed and dispatched on 24th December 2020. This will hopefully allow our couriers - DHL to enter the European Union by road service, before the 31st of December 2020.

ARC will stop - suspend selling into Europe from close of business on 23rd December 2020. ARC will re-start taking orders for selling into Europe on or around 5th January 2021.

With effect from 1st January 2021, new customs rules will apply for goods entering into Europe.

The good news for our E.U. customers will be that they will not have to pay U.K. VAT with effect from 1st January 2021. That is the only good news. The bad news at present is as follows:

1. Our couriers will have to make an export entry to leave the U.K., and they will have to make an import entry in the destination country. At present, the couriers will charge us and all U.K. exporters a fee for making an export entry of between £2.50 to £4.50. They will charge the importer between £11.50 to £13.00 to make an import entry in the country of destination.

2. There will be a delay in export from the U.K. for around two to three days while the couriers prepare and lodge export entries with U.K. customs for all the consignments which are loaded in specific road trailers. After this procedure is completed the trailer will be allowed to enter the channel tunnel or get on a ferry into Europe.

3. From 5th January 2021, the shipping charges stated on our website for shipping into E.U. destinations will include U.K. export entry charges (between £2.50 to £4.50) in addition to the road freight charges.

4. Once the goods reach their destination, depending on the couriers administration system in the country of import, they will contact the importer to ask them to pay the import entry charge (between £11.50 to £13.00) and taxes - duty (for goods above a certain value) and local VAT in the destination E.U. state. Once this is paid, the goods will be delivered to the importer. So, once again, this will cause delay.

At ARC,we believe that these costs are too high for most small value orders. These costs will be on top of the courier road freight costs which will also be increasing by 4.9% across all courier which we currently use.

At present we are uncertain if a solution for reduction in courier costs and delays can be found. If and when this happens, we will provide our customers with an update.

For now, we can only apologise for the inconvenience. We are very much aware that this development will make ARC less competitive for consideration by our E.U. customers.

Ketan at ARC.

Reminds me of the covid toilet roll panic, everyone is trying to stock up before Brexit and ports are overwhelmed

Unfortunately this is the dark side of Brexit for EU customers. I get most of what I need from the UK and avoid paying hefty shipping costs through groupage hubs. Their shipping rates are generally much lower, the downside in my case being an extra week waiting time for delivery, but I can live with that.

However the groupage route will now see me getting double taxed on vat, add customs and fees and it will not be worth while. That said, I order lots of stuff from china with different couriers and don't recall ever being charged for customs or vat. They do charge for USA orders tho. Maybe it depends on the value of the orders?

Chris

Just put in a long pondered order to Arc It looks as though B S J is going to be driving more custom to China.

jes

To be fair the already the average UK consumer can't get enough of the cheap chinese / indian etc. goods, as I have said before I recently purchased a good quality 'German' dishwasher made in Turkey

Tony

So much for "friction free trade after Brexit"....

It'll probably come from China etc. anyway it just layers of pointless bureaucracy we will all have to pay for. Something the politicians have been against until recently...

Thanks for the informative post, Ketan

Disappointing to see the discussion descend so quickly into “Politics”

MichaelG.

Chris B,

I have bought many items from China and never been charged any customs duties, I think because the descriptions on the customs declarations never match what is contained in the packages and the value always seems to be between 5 and 6 dollars, again not relevant to the actual value. It seems that this is an agreed practice with Chinese traders coupled with the myth circulating that the Chinese government controlled Postal Service subsidises postal exports to encourage foreign trade. I have no complaints about the system which sometimes can be extremely slow; I do not see a similar situation being in place with any EU country and as Ketan has so precisely explained there are going to be substantial costs for trade with them. My intention with this post is not to denigrate the situation with trading with Chinese companies but purely to lay out the facts as they are, I am certainly not knocking anything Chinese.
Dave W

Hi Chris B and Dave B,

You guys are on the right track. Here is a snippit from Parcelforces communication:

• At present it is difficult to say how many orders shipped out from ARC into E.U. will have a total value including carriage of below 22 euros. Although I am aware of Chinese traders practices, It would be wrong for reputable companies to abuse the system, and we know that we will loose custom as a result.
• From 1st July 2021, it is suggested that the E.U. will remove the duty and VAT free for orders below 22 euros.

According to U.K. HMRC the low value duty and vat free incentive for orders below £15.00 entering into the U.K. will be abolished at the end of this year. You can read more here on GOV.UK website. This topic was discussed earlier on a different thread, and Michael Gilligan had provided this or similar link I believe.

Ketan at ARC.

So you import direct bypassing the retailers in the UK , dodge some tax and avoid the retailers profit margin. Lovely ! If you don't support the likes of ARC, Warco etc they will disappear . Which of you will be the first to start crying like a baby bird at feeding time because your local school or hospital has been shut down through lack of funds? Who will post an epic tale about a lathe that arrived broken and you can't get your money back? Finally someone winging about how it's a disgrace that China owns us lock stock and barrel. Use some grey cells ,please.

That's correct Dave, UK traders will be at a disadvantage when compared to Chinese traders. I do not know how they manage to deliver at such low postage rates, but then I suppose not all countries post and customs work the same, over here for example, for imports from the US and non EU countries (excluding China) I am required to produce the invoice and proof of payment. Only when I pay the customs duty and taxes will the order be released. For Chinese orders this is inexistent.

I have one question for Ketan, if I were to have an order delivered to a UK address (such as a groupage hub as I mentioned before) would that be considered as a local purchase and consequently charged VAT?

Hi Chris B,

At present ARCs policy is to ship directly to overseas customers only. We do not supply to groupage hubs, or third party importer nominated freight forwarders as, based on past experience, they come with their own bag and range of problems. Again, yes, we do loose orders as a result of us failing to consider this idea.

But, the answer to your question is: YES it would be considered as a local purchase and U.K. VAT would be charged on such purchase, in accordance with U.K. law. The only time such a consignment is not subject to VAT is if the groupage hub is a recognised freight forwarder, and provided the freight forwarder is prepared to provide clear proof of shipment for the specific consignment, in a form which is suitable for U.K. HMRC. Usually, such freight forwarders may charge the shipper for such a document, and normally, such third party service providers are always too busy, and need to be chased regularly by the shipper to obtain such a document.

Ketan at ARC.

Far more difficult than that. Voting to leave the EU was voting for a Border with all that entails for the future. Checks on people and goods on both sides. Tariffs, paperwork, delays, disputes... For example, British Subjects visiting France will now join the 'Rest of the World' queue for full checks: passport, visa, credit, reason for and duration of visit, insurance, driving licences, and return ticket etc. Roughly 20 minutes rather than 2, worse if there's a queue. Plus new restrictions on anyone wishing to live, study or work in the EU.

Ironically for anyone who voted 'Leave' in hope of reducing immigration, our government has decided to wave everyone through on the UK side of the border! The hope is imported food won't rot whilst Czech lorry drivers have their right to enter checked and their cargo and paperwork is inspected to ensure the new tax and tariff arrangements are being followed. Not checking incomers at a border is a very odd way of 'taking back control'.

Ketan's post is an insight on the impact of a Border on exports. Pro-Leave politicians told us the EU valued UK trade so highly that an advantageous Trade Deal would be struck, including free movement of goods. Three years later a hard exit looks likely. Shouldn't be a surprise because the EU's position has always been core benefits are only available to member states. When dealing with outsiders, EU interests come first.

Although the EU is the UKs largest trading partner, it's but one of several trade blocks with whom new deals are needed. Of these, much was made of the benefits of increased trade with the US, but President Trump had other priorities during the presidential election. Not clear how President Biden will progress a US/UK Trade Deal given his negative views on Brexit's impact on Irish politics. Don't be surprised if the US uses trade negotiations to influence what happens in Ireland - there's always tension between trade and sovereignty.

International trade deals are horribly complicated. Failing to get one means nations default to World Trade Organisation terms which are the most expensive and bureaucratic. Not the end of the world, but best avoided if at all possible. Brexit is going to make exporting from the UK to several trade bloc's difficult until Trade Deals are struck: rather than a 1 or 2% growth next year, the UK economy is expected to shrink by 2 to 5%.

Interesting times ahead. My leave friends are all convinced the future wonderful; unfortunately none of them can explain how leaving the EU is going to work in practice. Government Advice isn't clear either. Businesses are to: Check, Change, Go. Unfortunately with 22 days to go, government advice to a businessmen like Ketan is:

If you sell manufactured goods

There may be new rules you need to comply with. Check regulatory requirements for UK and EU markets, including labelling, approvals and testing.

Check what? Change how? Go where? No wonder Ketan and many other companies are taking precautions - temporary suspension while the details emerge next year. Let's hope things improve quickly.

On a lighter note, a clear call from the government for Model Engineers to help businesses prepare for Brexit:

An attractive young woman in a high-vis jacket with safety glasses and helmet is struggling to read the digital version of MEW on her Tablet. And she owns such a nice lathe! What could possibly be wrong?

Can you think of a Caption?

Dave

Just a sad note regarding customs over here in Belgium...

Goods from outside of the EU are subject not only to local VAT (21%), but in addition that same tax is also applied to the shipping costs of said goods. On top of that comes a local 'inspection charge' (about 20£ for the processing of the paperwork. All of these costs are payable 'at the door, upon delivery', before one even gets to inspect the contents of the shipment.

The so-called average orders will become screamingly expensive relative to what they were prior to Brexit. Only relatively large and expensive orders will be worth the extra grief and expense.

Thanks for your answer Ketan. Regarding Groupage hubs and freight forwarders, I have used their services for lots of orders from different UK traders (including Arc), EU and US traders without incident. Of course I bear the responsibility for the shipment from the hub to my country. I've had a lathe and a milling machine delivered this way.

Unfortunately the extra costs in taxes and paperwork will turn away overseas customers. I have stocked on what I needed from Arc last week, I really hope some sort of trade deal is made for the sake of both the exporter and importer.

Dave

If the lathe was running (it appears stopped)

My caption would be:

"Hair today, gone in a second"

Do I win the £5 prize?

Regards to all

Derek

"I pressed start on the ap. Why isn't it going round?"

The reason chinese post is cheap is that it's considered a 'transitioning country'. An absurd situation when they have such a proportion of trade. That status allows outbound cheap post and under accepted rules leaves the incoming country's postal service the joy of delivering myriad packets at their loss. And explains why return post is so pricey in compsrison with china>here.

pgk

Ignatz,

With exception of a few countries like Israel (for low value personal imports), value of goods for the purpose of calculating VAT in most countries has always been based/calculated on the total of value of products ordered + carriage + duty.

Ketan at ARC.

There is another problem out there: Our ports are being swamped by empty containers when they should be back in China.

https://www.bbc.co.uk/news/business-55237791

JA