Businesses Should Prepare for the Worst on Customs Duty

Alison Horner, VAT partner at MHA MacIntyre Hudson, below discusses the UK government’s recent moves on customs duty.

This announcement is a very bold step from the UK government, especially given the EU’s public stance on the single market and the clear message that Brexit means an exit from the associated free trade arrangements. But the step is very much needed to get us to a workable transitional agreement.

Without decisive action, we appear to have only one outcome, defaulting to the World Trade Organisation’s (WTO) customs duty tariffs. The Government’s understanding of the practical implications of this outcome is finally becoming evident, which should be reassuring for businesses.

A Free Trade Agreement (FTA) is what all UK businesses who deal with European trade really want. It’s also better for UK consumers, who, without an FTA, could for example be faced with an additional 10% Customs duty cost when they buy a European car. Businesses trading with the EU may also encounter administrative snarl ups, similar to those seen recently with holiday makers at passport control in some EU destinations.

These proposals are only a starting point and we think that the retail and motor industries in particular will lobby hard for a sensible agreement, as it affects both importers and exporters of goods throughout Europe. In the meantime, businesses should continue to assess the potential worst-case scenarios and review WTO tariff codes for their intra-EU supply chains, just in case.