The UK government will tomorrow (Thursday 23 August 2018) publish the first in a series of technical notices designed to prepare the UK for the possibility of a no-deal Brexit.
RSM, the leading audit, tax and consulting firm to the middle market says it is imperative that the impending notices present guidance that is clear, and without ambiguity, so that businesses are able to prepare for every eventuality, just 219 days ahead of Brexit on 29 March 2019.
One of those no deal or hard Brexit scenarios will be the reintroduction of customs formalities at the UK border, the implications of which could be significant for 145,000 businesses, many of them middle market entities.
Simon Hart, lead Brexit partner at RSM, comments:
‘In response to calls for greater clarity around the impact of a deal or no-deal with Brussels, these 80-plus scenario notices, specific to goods, services and operations, will be looked at in great detail by UK citizens, businesses and public bodies.
‘Our latest survey of middle-market business leaders, The RSM Brexit Monitor, highlights that although respondents are by and large confident that the UK will achieve a “good deal”, strong views were expressed for the need for greater clarity. Support for exporting and trade opportunities, supplying useful and workable information to enable business to plan-ahead and progress-reports on the negotiations process itself are all seen by middle market business leaders as lacking. As Brexit day fast approaches, there is real demand now from businesses for less ambiguity from Government, and clear, pragmatic and workable guidance to allow businesses to scenario plan. The question is whether the release of these technical notices will satisfy that demand but also allow reasonable plans to be put in place.’
Commenting on the greater need for guidance around the customs impact, Brad Ashton, Customs and International Trade partner at RSM, comments:
‘The key outcome of a hard Brexit would be the reintroduction of customs formalities at the UK border for all goods. This means import and export declarations would be required to be submitted to HMRC to report and clear goods at the UK border. This would require an additional 145,000 businesses, many of them middle market entities, to be exposed to the customs process; many of them for the first time.
‘Those businesses that may be exposed to the customs process as a result of Brexit will not have the necessary resources and infrastructure in place to deal with this efficiently. In addition to the potential delays that the formal customs process may introduce in supply chains previously unfettered by the customs process, they will also be impacted by the need to finance import taxes, which will result in additional costs; some to the bottom line. Those additional costs include customs duty, import VAT, as well as process and compliance costs associated with the customs process. Detailed guidance will be needed to navigate this potential outcome.