Monday, January 08, 2018
Yet another bureaucratic Brexit nightmare
As if things were not bad enough for business it emerged over the weekend that many companies face further problems when we eventually leave the European Union.
The Independent reports that changes outlined in one of the many Brexit-related bills would force over 100,000 companies to pay VAT on goods at the point they enter the UK, rather than after they are sold. This could create severe problems for UK companies, including cash flow issues and additional bureaucracy:
Business groups said the change would create severe problems for UK companies, including cash flow issues and additional bureaucracy.
At least 130,000 UK firms will be forced to pay upfront import VAT once Britain leaves the single market, under which import tariffs are not imposed on goods bought from other EU countries.
Currently, firms can register with HMRC for permission to import some goods from the EU free of VAT. They register the charge but the levy is added to the price of the product and paid by the customer.
Under the new system being planned, the Government said, “import VAT is charged on all imports from outside the UK”.
Businesses would then have to pay the tax upfront and claim it back at a later date, meaning they would be spending significant sums of money long before they recoup them in sales.
Naturally, the British Retail Consortium is livid. They told the paper: “If the bill becomes law without any commitment to inclusion within the EU VAT area, UK businesses will become liable to pay upfront import VAT on goods being imported from the EU-27 for the first time.
“Liability for upfront import VAT will create additional cash flow burdens for companies, as well as additional processing time at ports and border entry points attached to the customs process. Mitigation measures could include companies instituting a revolving credit facility, or utilising import VAT deferment reliefs.
“Both measures require companies having to take out costly bank or insurance-backed guarantees, so would increase the costs of importing goods from the EU.”
So much for the Tory party being the party of small business.
The Independent reports that changes outlined in one of the many Brexit-related bills would force over 100,000 companies to pay VAT on goods at the point they enter the UK, rather than after they are sold. This could create severe problems for UK companies, including cash flow issues and additional bureaucracy:
Business groups said the change would create severe problems for UK companies, including cash flow issues and additional bureaucracy.
At least 130,000 UK firms will be forced to pay upfront import VAT once Britain leaves the single market, under which import tariffs are not imposed on goods bought from other EU countries.
Currently, firms can register with HMRC for permission to import some goods from the EU free of VAT. They register the charge but the levy is added to the price of the product and paid by the customer.
Under the new system being planned, the Government said, “import VAT is charged on all imports from outside the UK”.
Businesses would then have to pay the tax upfront and claim it back at a later date, meaning they would be spending significant sums of money long before they recoup them in sales.
Naturally, the British Retail Consortium is livid. They told the paper: “If the bill becomes law without any commitment to inclusion within the EU VAT area, UK businesses will become liable to pay upfront import VAT on goods being imported from the EU-27 for the first time.
“Liability for upfront import VAT will create additional cash flow burdens for companies, as well as additional processing time at ports and border entry points attached to the customs process. Mitigation measures could include companies instituting a revolving credit facility, or utilising import VAT deferment reliefs.
“Both measures require companies having to take out costly bank or insurance-backed guarantees, so would increase the costs of importing goods from the EU.”
So much for the Tory party being the party of small business.
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Businesses can pay later, under this proposal it comes 1st, result extra up front costs.To cover this extra cost they will have to have reserves at hand to pay it.If they cannot get the money from the banks it could be a cost added to the consumer, prices go up, those who cannot cope go under or are bought out. This can lead to job losses and/or ,maybe, robots filling jobs as a cost cutting move.The Govnt I guess will be equally strapped for cash due to Brexit. If this is not thought out we could end up in recession. Support must be put into place to make the hit less severe.
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