Brexit and the future of Oakley Sound

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Synthbuilder
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Brexit and the future of Oakley Sound

Post by Synthbuilder » Thu Oct 22, 2020 7:34 am

I have no real idea of what will happen at the end of this year. I've just been to the government's online help pages and, to be honest, I'm not any the wiser. The basic gist of the information was 'get professional help, it's really complex'. Ultimately, with a no deal looking increasingly likely, the final outcome is that buying PCBs from Oakley Sound will be become either more costly, take longer, both of the above, or impossible.

Currently the UK trades as part of the EU and because of that we have deals with most of the rest of the world. Which includes the US and Canada. As of 1st January 2021 that all ends and new trade deals will need to be struck. While those are being negotiated (and they take years) we will abide by WTO rules. Whatever that means in practice for a small company selling PCBs whose average order value is around 40GBP I have no idea.

There are several options for me:

1) Do nothing and see what happens. I'm guessing that EU customers will, after a short period, start getting those wonderful little notes from the courier or postal service that your order is currently being held in customs awaiting VAT and a fee to be paid. That may even happen to US and Canadian customers - once again I have no idea.

2) Get VAT registered and set up the various mechanisms in place to allow me to trade with destinations outside the UK. This could be easier than I am currently thinking it will be. But probably not. Although this is my job, it's more of a hobby really. I don't make enough money from this to make significant amount of extra work viable.

3) Find someone else to sell my PCBs.

4) Give up and play more music. My mother tells me I ought to write a number one song. Perhaps I should try that.

Tony

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BugBrand
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Re: Brexit and the future of Oakley Sound

Post by BugBrand » Thu Oct 22, 2020 7:45 am

I hear you, Tony. It is hard to get clarity for small players - both in terms of general lack of clarity, alongside the fact that we don't tend to have funds to pay for lots of professional help.

VAT/EORI has been flagged up a few times - I'd suggest if you can avoid VAT registration then do! Presuming you're under the mandatory threshold.

It'll be interesting to see how small transactions/shipments change - saw a somewhat worrying note today about small items but remains to be seen quite how it pans out. Quite a lot flies under the radar at the moment & I'm not sure I'd give UK credit to tighten such things up effectively anytime soon!

One area I wonder on is whether effective prices will change or not - I mean, I won't have to charge VAT on sales to EU countries, so that's a saving for buyers, but then they'll probably/possibly be charged import - so maybe little difference unless, as you note, brokerage fees are added!

Sidestepping the quagmire of feelings on Europe, the uncertainty I note is that we still do not know the framework we'll be working with - once that becomes clearer we can all figure how we'll work going forwards. If you don't know the rules (because they haven't been written!) then you can't play the game!

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Lux A Turner
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Re: Brexit and the future of Oakley Sound

Post by Lux A Turner » Thu Oct 22, 2020 1:25 pm

BugBrand wrote:
Thu Oct 22, 2020 7:45 am
I'd suggest if you can avoid VAT registration then do! Presuming you're under the mandatory threshold.
Agreed. If you register for VAT then you'll have to charge it - including to your UK customers - either by adding it to your prices or taking a hit on your margins. You'll also have to administer it and submit a quarterly VAT return.

The VAT threshold is being / has just been reduced to zero by all EU member states (and the UK) - so VAT will have to be paid on everything from outside the EU from now on - even items worth less than £15.

Dealing with European countries isn't getting any easier for the small trader. Germany (for example) has started enforcing its packaging regulations more tightly of late. That's where you're supposed to register with an agency in Germany and pay an annual fee, if you're sending so much as a single, commercial package to that country. OK, it's only 9 Euro for small operators at the moment - but how long will it be before the other 25 remaining EU members introduce something similar and how long will it be 9 Euro?


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Re: Brexit and the future of Oakley Sound

Post by kdjupdal » Thu Oct 22, 2020 2:08 pm

I have bought a number of PCBs and had them sent to Norway. Norway isn't in the EU but has the EEA agreement with EU. For the time being Norwegian customs don't charge VAT on orders less than 350NOK, but in theory they should. For larger orders I pay VAT + a handling fee (= a fee for allowing me to pay a fee, kind of annoying).

I don't see that anything would change for sales to Norway, unless they decide to put customs duties on consumer electronics, in addition to the VAT. For the EU countries things will of course change.

I suggest number 1, maybe in addition to making more music. ;)

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Re: Brexit and the future of Oakley Sound

Post by terjewinther » Fri Oct 23, 2020 1:34 am

Dear Tony,

I have been buying, building and using your PCBs and modules for a long time now. I live in Norway, which is in Europe, but outside of the EU. This means that for all these years I have paid import VAT and fees. I still do it. Even though the import VAT in Norway is high; 25%. (Although I have to admit that sometimes the small, flat parcels from Oakley Sound did go through customs without any fees, because it just looked like a letter.)

Up until recently Norway had a low limit of 20 GBP for import tax, so very small items under this value limit could go through customs without any import VAT. Now that lower limit has been removed, so in theory everything imported to Norway should pay VAT. However; I still receive very small parcels - including shipments from Oakley Sound and other small parcels like a tiny bag of transistors - without paying VAT. This is because the Norwegian government (or more likely the Norwegian postal services) are working on a solution where normal people themselves can do the import VAT payment without large government fees (which are often like 25 GBP). While doing so, I believe they just let small parcel slip through, otherwise custom service storage would be enormous! I believe this will be more and more common, as online sales are increasing: easy import solutions for common people. The input from others to "avoid VAT registration then do! Presuming you're under the mandatory threshold." is a very good advice. It is probably a new situation for people in EU and USA/Canada, but it is an easy solvable situation. The first time you have to fill out a tiny form it feels strange, but then it quickly turn into a habit.

If there is a change in pricing, shipment costs and/or import tax/fees, we will quickly learn the most effective way to combine orders. Is it best for me to buy a single module at a time, combine 3-4 modules, or do larger collective order together with friends and others? People find solutions.

Continue to make and sell PCBs and modules. The music needs it. Do not worry about the costs. We will buy them anyway.
New people coming into building will get it. This list will help them getting through.
New people getting into synthesizers that do not want to build themselves can buy readymade modules, and this can of course be done through others, like Krisp.


Terje Winther
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Re: Brexit and the future of Oakley Sound

Post by kdjupdal » Fri Oct 23, 2020 3:48 am

I am guessing the sales to Norway - which are probably mostly Terje and me - are not a big part of Tony's international sales. I didn't know that even US and Canadian customers enjoy tax free purchase from UK. Certainly customers there will be bothered by the hassle of VAT and increased cost, since they are not used to this. Maybe the best longterm solution would be to license PCB sales to someone else.

The popularity of modular synthesizers has surged in the last 10 years, but it seems the DIY building of modules has not increased that much? I think most people haven't got the time or patience to build and it is much more affordable for many to buy a finished synth these days.

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Re: Brexit and the future of Oakley Sound

Post by Synthacon » Fri Oct 23, 2020 3:56 am

Your mum is very wise my friend.

I think to be 2 and a bit months away and to be none the wiser is incredibly frightening.
You always want just one more synth

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Re: Brexit and the future of Oakley Sound

Post by Mr.Kus » Fri Oct 23, 2020 4:31 am

BugBrand wrote:
Thu Oct 22, 2020 7:45 am
One area I wonder on is whether effective prices will change or not - I mean, I won't have to charge VAT on sales to EU countries, so that's a saving for buyers, but then they'll probably/possibly be charged import - so maybe little difference unless, as you note, brokerage fees are added!
In Finland, and I assume most other EU countries as well, customer always needs to pay VAT. If the seller operates in EU tax area, seller will charge it, otherwise it's charged separately. On top of that there's also a smaller customs/imports fee, for imports outside of EU. There is some threshold for customs fee, under which it's not charged. VAT is calculated from combined price of the product and postage.

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Re: Brexit and the future of Oakley Sound

Post by werock » Fri Oct 23, 2020 4:58 am

I would guess the onus will fall on the buyers, same as it is now if I buy something from the US, it's down to me to pay the vat etc if it gets caught by customs. You'd probably have to attach a customs form to the parcels you send to an EU country.

However, despite the hysterics of the media and public declarations by the idiot politicians, the betting markets are still giving a >70% chance of a deal before the end of the year, so all is not lost.

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Re: Brexit and the future of Oakley Sound

Post by waldenpotato » Fri Oct 23, 2020 8:58 am

I would be bummed to not be able to buy Tony’s boards. I only started building them a few months ago. I’d love to be able to see the new designs come out.

If anything maybe I should just buy a bundle before the end of the next month.

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Re: Brexit and the future of Oakley Sound

Post by Synthbuilder » Mon Oct 26, 2020 4:37 am

My thanks for everyone's thoughts on this matter. For the moment I will continue on as normal.

However, it may be prudent that if you do want something and you live in the EU, then maybe now is the time to order.

Tony

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Re: Brexit and the future of Oakley Sound

Post by Schlumpfhut » Mon Oct 26, 2020 5:45 am

Synthbuilder wrote:
Mon Oct 26, 2020 4:37 am
However, it may be prudent that if you do want something and you live in the EU, then maybe now is the time to order.
Already done ;)
After spending quite a lot of money i must compliment you on great communication, fast delivery and (again) excellent quality.
Can't wait to start building but first i need to get more stuff out of the UK before i qould have to pay VAT and import fees.

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Re: Brexit and the future of Oakley Sound

Post by Prunesquallor » Sat Oct 31, 2020 3:09 am

I live in Spain and the deal is that if an order from outside the EU is below 150 Euros, including postage, then it won't get stung with extra costs. This sounds similar to what happens in Norway, judging from the posts above. PCBs should therefore slip under the radar.
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Re: Brexit and the future of Oakley Sound

Post by nangu » Sat Oct 31, 2020 3:21 am

USA doesn’t charge import duty for anything under $800, so there shouldn’t be any changes here.

Things are probably going to sit in customs for a month, but that’s been the situation for quite awhile.

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Re: Brexit and the future of Oakley Sound

Post by Muff McMuff » Sat Oct 31, 2020 3:51 am

Maybe push sales from now until the end of the year. Promotions, black friday, pre christmas sale whatever whilst the frictionless trade exists. Take a step back when the early January chaos and red tape comes into effect and hopefully smooths out as the month or months go on. My understanding is the form filling and documentation is guaranteed. The deal or no deal is basically over how much tax the EU will apply to British products and how much tax the UK will apply to EU stuff coming in. Even a "deal" will be bare bones minimum and more comprehensive deal will be negotiated in the years to come.

USA could in theory become easier and be more like what buying and selling in the EU is today depending what deal is struck. That would be a benefit of brexit. Its funny that negative things of brexit are obvious and many but the promised "brexit dividend" is much harder to quantify. Even keen brexiters can't reel off the benefits other than "we will prosper mightily" and other guff.

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