Businesses would be hit by annual £15bn customs bill under no-deal Brexit

New research from HMRC reveals that UK and EU businesses would be hit with a £15bn customs bill if we leave without a deal.

UK and EU businesses would be hit with a collective yearly customs bill of £15bn after a no-deal Brexit, according to HMRC.

Its impact assessment said:

“The latest statistic estimate for the annual administrative burden on UK businesses from import and export declarations is £7.5bn (updated to reflect 2017 UK data) with import declarations for all EU trade in goods movements.”

It said that additional administrative costs will also apply to businesses in the EU because an export declaration from the UK will need to have a corresponding import declaration into the EU and vice versa.

This analysis comes from the trade statistics evidence base, used by the World Bank in compiling their Doing Business report in 2017. So, HMRC estimates that the static total ongoing administrative burden on UK-EU trade is £15 billion (updated to reflect 2017 data) a year.

The report also highlights that the average time taken to fill out a customs declaration form will be one hour and 45 minutes for high volume declarations but doesn’t specify for low volume. It did show that small traders importing low volumes would pay £56 per form, assuming that low volume traders would outsource their declarations.

More changes to no-deal temporary tariff

However, HMRC’s figure “does not take account of any temporary easements which have been introduced to reduce these costs.”

This includes the temporary no-deal tariff announced earlier in the year. The taxman’s findings coincide with an announcement of changes in the tariff to HGVs, bioethanol and clothing. This tariff aims to keep prices down for consumers.

The temporary tariff means that 88pc of total imports to the UK by value would be eligible for tariff-free access – but will only last up to 12 months.

Officials say that this is an opportunity to source goods from around the world, lowering the tariff on New Zealand honey from 17pc to 0pc and a drop from 15pc to 0pc on Brazilian grapes. Tennis rackets and wine will not have tariffs either.

In response to the latest updates, Federation of Small Businesses (FSB) chairman, Mike Cherry, said:

“While these tariff adjustments will be good news for businesses in certain sectors – particularly smaller firms in our vital haulage industry – the cold hard fact remains that two thirds of small businesses that fear the impacts of no-deal feel they cannot prepare for this outcome.”

He adds that the average cost of putting contingencies in place for small importers and exporters is £3,000.

“Small firms are crying out for two things at this point: a pro-business Brexit deal and financial assistance to help manage the costs of uncertainty. The urgent issuing of £3,000 export vouchers is a must.

“It’s also important to stress that these tariffs only apply to the 12 month period after a no-deal scenario. What small businesses really want – with confidence suffering an unprecedented losing streak – is a return to an environment where they can plan three, five and ten years in advance.”

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Only one fifth of small businesses have prepared for no-deal Brexit

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Anna Jordan

Anna is Senior Reporter, covering topics affecting SMEs such as grant funding, managing employees and the day-to-day running of a business.

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