LONDON (Bloomberg) – As mile-long trucks disintegrate in ports, UK businesses are raising low-level friction patterns along the EU border, which could cause more lasting damage.
From health certificates to new taxes and additional paperwork, the cost of moving goods across the English Channel is increasing as Britain leaves the EU. Just 6 per cent of companies told the Bank of England that they were fully prepared for what was to come, and that the headache would begin within two weeks of the new system.
While each of the new rules marks a small change from the borderless trade that Britain has enjoyed for four decades as a member of the European Union, they add a significant barrier together. It is already starting to improve supply taxes and limit exports to companies of all sizes. 5.9 million small and medium-sized businesses in the UK are severely affected, employing five-thirds of those working in the private sector.
“It’s very complicated,” said Adam Marshall, director general of the British Chambers of Commerce. “It’s like an onion – the more you peel, the more you cry.”
The biggest annoyances affecting businesses here are because the UK is no longer a member of the EU’s single market and customs union:
Rules of Origin Origin
To determine whether EU companies must pay value-added tax when reselling in the EU, Brexit must show where their products were made – and where the components in those products come from. The answer determines whether they are eligible for free treatment. There are no such rules for trading within the EU, which makes the old system much easier.
Confusion over the rules has already sparked complaints from big name retailers such as the Marks & Spencer Group. Others have suspended sales to the EU. Debenhams has temporarily shut down its Irish e-commerce site, while John Lewis Partnership has suspended distributions to Azos and Fortun & Mason Ireland.
“Businesses have been completely blindsided by part of the ‘primitive rule’ of the deal, which creates a major competitive disadvantage when selling in the EU,” said Michael Dale, senior manager at UHY Hacker Young, an accounting group. “Unfortunately, not enough to make them.”
British exporters must register to pay value added tax (VAT) in EU countries. Stuart Lisle, chairman of the Brexit task force at BDO, a professional service company, said this was prompting many companies to stop cross-border trading.
“If customers from any EU state want to continue selling from our shares in the UK, they should immediately VAT-register in each target country,” said Jenny Pots, co-founder of Uncle Moong, which sells eco-friendly disposable clothing. And wet wipes. “If we do not do so, we will trigger immediate debts. This is very annoying. We need to ask if all the time is worth the effort.”
Mr Lisle said many of his clients had never had to deal with those issues before and that the extra costs and problems would be “too expensive to manage”.
• Health tests
The Brexit agreement did not alter the rules for cross-border exports of phytosanitary products, including plants and seeds. Farm products qualify for zero-charge, zero allotment terms, but that does not apply to live plants.
According to Andrew Schia, director of the Potato House in Dundee, Scotland, this means that the EU has not accepted its seed potatoes. This product has been grown in Scotland for over 100 years, and half of Skia’s sales are in the EU.
“Until now, the EU has been a domestic market for us,” he said. “Now we need phyto-sanitary certificates, and letters must be with each order.”
Red ribbon and paperwork
In an effort to simplify the forms they have to file, some shipping exporters are now refusing to carry loads of different products mixed with different products, according to the Scottish Food and Beverage Trade Organization. This affects small-scale shipping companies proportionately. Another issue is that the terms of the contract were announced just days before the deadline to comply.
“If you issue guidelines a few hours before the transition period is over and businesses are busy dealing with the epidemic, things will start to fall apart – and they will start to fall apart,” said CEO James Withers. Business Group. It is asking the government to give the EU a deadline until July to implement it.
Port delays and costs
Delays in ports and the reluctance of some trucking companies to deal with the inconvenience have pushed up the cost of shipping goods across the border.
Oliver Conger, managing director of Rototherm Group, which manufactures sensors and now personal protective equipment, said: “Things are getting tangled up.
The drastic new Govt-19 locks that close essential businesses will not help. A study by the British Chambers of Commerce found that four out of 10 companies reported a decline in their liquidity in the fourth quarter.
“Thousands of small businesses across the EU need to invest in technology, consulting and operational change, but do not have the money to do so,” said James Sibley, an international affairs adviser at the Small Business Federation. .
Products sold in the EU require a CE mark indicating compliance with health, safety and environmental standards. Companies that produce their own certification in the UK, i.e. sell in both regions, are required to register for both grades.
“This is a ridiculous copy,” said Renee Watson, founder of The Curiosity Box, a subscription service that teaches children about science. With annual sales of 000 500,000 (S $ 900,500), the company will have to spend £ 20,000 on new security points to sell in the Netherlands, France and Germany.
Ms Watson identified 26 areas of her business that Brexit could affect. “I struggled to allocate more time.”