Jack Simpson's latest column for the Journal.
I have been waiting for this moment, Brexit which has always been just around the corner is back, to further complicate 2020.
The UK has officially told the EU it won’t be seeking an extension to the “transition period”, the deadline to agree is July 1st. This does not mean we are now leaving the EU without a deal, but it does put a No Deal scenario back on the table.
Our members are clear that the UK should do what it can to get a deal that protects and promotes trade with our largest market, Europe, and in a timely manner to allow for preparation.
However, this Government is thankfully gearing up for the consequences of this. The recently announced “Global Tariff”, the tax you pay to bring goods into the UK, when trading goods without a deal, and now a phased border policy helps business understand the base scenario for the future trading environment
Customs is tricky at the best of times, there’s lots of documents, numbers and checks to make sure the goods are safe, proper and secure to enter the market. It is estimated that on leaving the EU, annual documentation will rise from 50m to 300m+, many of which will be done by businesses that have never faced a customs check.
Therefore, from January 1st, 2021, the UK will gradually introduce its customs border. This will allow HMRC the time to increase capacity and business to adapt to the new process. From January, only dangerous, or “controlled”, like alcohol, will be subject to checks.
Meanwhile all other “standard” goods can move into the UK freely, but will have to complete documentation and pay duties or VAT within the six-month grace period.
From April, sensitive goods, such as chemicals, will become subject to UK entry checks and regulation. Then by July 2021, all goods will face the full border documentation, tariffs, and, when needed, checks.
While this is positive, it has the potential to turn into a logistical and administrative nightmare, for businesses and HMRC.
What we need to see is clear communication from Government, as well as a strong support system to help business adapt to trading changes.
Adding time or costs to business because they ticked the wrong box or added the wrong number, would undermine the UK’s competitive edge.
The Chamber is launching a “Ready to Trade” training series from July to help members get customs ready.