Insights on Brexit from panelists at our customs roundtable
The Chartered Institute of Taxation held a roundtable on Customs and Brexit, in Parliament, earlier this month. Glyn Fullelove, Deputy President, Chartered Institute of Taxation (CIOT), chaired the meeting and the parliamentary sponsor of the event was Kirsty Blackman MP.
Alan McLintock, Chair of the CIOT’s indirect taxes sub-committee, and a senior tax manager at a large US automotive company Jeremy White, Barrister and Consultant Editor of Tolley’s Customs and Excise Duties Handbook Daniel Lyons, Indirect Taxes Partner at Deloitte Jayne Simpson, Technical Officer (Indirect Taxes) at the CIOT John O'Loughlin, Director, Global Trade and Customs at PwC in Dublin
Chair’s Introductory Remarks
The chair, Glyn Fullelove, explained that the CIOT is a body of some 18,000 UK tax professionals, and also a charity, which means it works for the public benefit. This includes working to increase understanding of tax and to make the tax system work better, bringing the experience and expertise of tax professionals to the table, to help government, and others involved in developing tax policy.
He said the object of today’s discussion was to bring together some of the leading practitioners and experts in Customs and VAT, and parliamentarians and their advisers from both Houses, and all parties, who are engaged in the debate on the post-Brexit framework for these areas. He stressed the strictly non-partisan nature of the CIOT’s work.
He explained that the discussion was open, and CIOT is keen that parliamentarians use any information provided during relevant debates.
He stressed that all panellists were speaking in a personal capacity and not as spokespeople for their firms, or indeed for CIOT.
He then asked each panel member to set out briefly their perspectives on the proposals currently on the table.
Opening remarks – Alan McLintock
Alan McLintock is Chair of the CIOT’s indirect taxes sub-committee, and a senior tax manager at a large US automotive company. He said up to 20 per cent of his working week is spent in meetings about Brexit; meetings that take place with a background of a plan for dealing with a disorderly hard Brexit. His company have different workstreams dealing with the consequences of what to do in the event of a deal and ‘no deal’.
“Supply chains are enormously complex, evolving constantly and very difficult to keep track of,” he said. It’s not Brexit-related as such but it’s just to emphasise how complex it is before you even take Brexit into account and one of the things that I am concerned about is that our Brexit plan is looking at ‘the big stuff’: how do we get cars in? How do we get engines out? What is it going to cost us to do it? But I worry that there is less visible business activity where a Brexit impact will only come to light when a process or movement breaks following a hard Brexit (or that the movement happens but we do not report it correctly).
He said a concern was, if there is a mistake somewhere, what will the UK tax authority’s response be – penalise all or will Brexit be managed with a ‘light touch’ by HMRC?
Opening remarks - Jeremy White
Jeremy White is a barrister specialising in international trade. The biggest challenge is resources, with the most important being ‘time’, he said.
With regard to the Irish question he noted there were “some very attractive paragraphs of goodwill [in the Treasury technical papers], and recording goodwill in the EU and the goodwill of the UK Government, but no detail”. The ‘Irish problem’ is a creature of Irish politics and the EU Withdrawal Agreement, where the UK said it would commit to no hard border as part of the Withdrawal Agreement but not part of the future agreement. That is illogical, he said, because the nature of customs control is something for the future.
On the Facilitated Customs Arrangement (FCA), Jeremy said it is not workable without the right resources being applied to it, by the UK and EU. Much of the workability of the FCA in the White Paper will depend on implementation of the Union Customs Code (UCC) by the EU27 – particularly Ireland - and by the UK. There are two dates, he said. The UK has said transition to the UCC will last until 2021. That used to be the date for final implementation by the EU27 - but they have now decided to put back final implementation for the trade facilitation side of the UCC until 2025, so there is a ‘complete mismatch on time’, he said. There is also a mismatch on policy, budget and agreement to devote resources. “The EU has spent its money on trade facilitation which is that afforded by the UCC. They are not going to spend money on another version, no matter how interesting.”
However, he concluded, the fact that the FCA could be made workable does not mean that it will be workable. “Without the application of resources… it is not going to be workable.”
Opening remarks - Daniel Lyons
Daniel Lyons is an indirect tax partner at Deloitte’s tax group. He used a couple of anonymised examples of real-life case studies of companies involved in cross border trade to show how complicated things could get with Brexit.
Example one – retail company
“Firstly, let’s say you’re a large retail company and you’re importing goods from non-EU and from the EU into the UK, and you’re using the UK as a hub to send those goods out to online customers right across Europe… Let’s use Ireland as an example of the destination country. So in the current situation the goods that arrive from the EU, that’s absolutely fine, there’s no custom controls around those, there’s acquisition VAT so just some paper accounting. You send the goods off to Ireland, with no further import/export declarations. For the goods coming in from non-EU obviously there’s import VAT and customs duty that has to be paid if they are dutiable goods with a positive tariff. So as those meerkats used to say in the advert: “Simples”!
“Post-Brexit – okay, you’re still importing goods into the UK from the rest of the world, but you’re also importing goods from the EU. The EU now effectively counts as the rest of the world, so you’ve got an import declaration into the UK – customs duty may be payable. Then the goods are being sent off to customers in Ireland. If the value of the goods is less than £150 there will be no customs duty payable in Ireland but there will be VAT payable there. But this company is one of those modern businesses that does everything online and a lot of the goods that are sent to Ireland come back again – about 40 per cent of them come back again… Now if the goods go back individually then you’ve got a customs declaration, an export declaration from Ireland back to the UK, and an individual import declaration back in the UK. That’s clearly not going to work. So the business is now going to have to aggregate the goods in a warehouse in Ireland and then bring them back en masse to the UK, and as there’s going to be another import into the UK, there could also be extra customs duty payable. So something which was relatively straightforward and simple has now become (a) very complicated, and (b) quite expensive.”
Example two – pharmaceutical company
The second example was of a global pharmaceutical company, which brings in its product from Holland (customs cleared there). The product comes into the UK but is still owned by the Dutch company. It is then manufactured into pharmaceutical product in the UK either by third party toll manufacturers or by a company linked to the Dutch company and then shipped outside of the UK by the toll manufacturer or by a related company in the UK. The tax is simple at the moment but post-Brexit, as the goods remain under the ownership of the Dutch company, when they are imported from outside the UK into the UK there is import VAT, but ‘annoyingly’ because of the way HMRC approach this, because the goods are not owned by the company importing them, that company cannot recover the import VAT on them. To resolve this, you need to use inward processing relief and customs warehousing, and by actually manufacturing the goods within the customs warehouse using inward processing relief to bring the goods into the UK then export them out (from the toll manufacturer) and then (for the goods which will remain in the UK) doing all the transactions in the customs warehouse, delivering them ultimately to the UK company that then imports them, it can then recover the VAT. That’s an awful lot of process and administration.
Opening remarks – Jayne Simpson
Jayne Simpson, CIOT Technical Officer, said there is huge concern as we head towards the March deadline that, if the UK ends up in a ‘no deal’ situation, businesses will have to deal with swift changes to cross border processes for trading with the EU27, around the same time as having to deal with the introduction of Making Tax Digital for VAT (compulsory digital record keeping) from 1 April 2019 and also the transition from the outgoing CHIEF customs system to the incoming CDS.
Jayne said that concerns are regularly raised by CIOT members that they are having to advise on ‘possibilities without certainty’ and, more worryingly, that clients in the small and medium-sized business sector are still not taking steps for Brexit planning at this stage, waiting until there is certainty, because of the costs of taking advice and implementing approaches is too great while things remain uncertain.
There has been a positive response from CIOT members to news that postponed accounting for import VAT will be introduced in the event that there is a ‘no-deal’ Brexit outcome. CIOT members hope that this will be considered during any transition period and, indeed, after Brexit, with a deal too.
Unless there is a relief available such as zero-rating, all parcels sent to UK consumers by overseas business will be subject to UK VAT due to the removal of the £15 Low Value Consignment Relief. Parcels valued at £135 or less will be duty free, she said. For such sales the Government say there will be a technological solution for non-UK suppliers to register for UK VAT and account for the VAT on such sales.
Whilst we anticipate that the majority of international businesses will be compliant, CIOT has concerns that there will be businesses that seek to exploit these procedures and import goods into the UK either VAT free [by not registering] or by suppressing the prices declared in the declarations [where they do register].
International trading controls have been introduced for online marketplaces (joint liability with sellers) and the fulfilment house due diligence scheme for holding stock with a UK fulfilment agent as there has been a minority but significant number of non-UK sellers that have evaded UK VAT and duty. We would like to understand how will non-UK evaders be identified and compliance enforced? How will valuation issues be identified? If sales values are understated, would lose VAT but if the value of the parcel is over £135 but declared in the VAT system at a lower value, HMRC will lose VAT and customs duty.
For compliant businesses, CIOT would like to understand how they deal with the returned goods out of the UK when the UK consumer will be posting the goods back (and having the ‘export evidence’)? How do they deal with replacement/warranty goods where there is no charge to the consumer?
Distance selling arrangements will be withdrawn in a no-deal outcome when selling to EU27 consumers. Currently UK businesses can either:
Charge UK VAT on sales to EU consumers provided the total sales in that country remain below the local threshold (€35k/100k) Where the registration threshold is breached, stop charging UK VAT and charge local VAT.
No customs duty issues arise in either scenario.
New positon as all sales will be zero-rated from the UK – 3 possibilities
‘Upgrade’ local VAT registration to include local customs duty registration so the supplier can import goods locally – the business now has to newly deal with customs in up to 27 countries Newly register for local VAT and customs duty obligations – for businesses who were previously selling under local thresholds (ie charging UK VAT) the costs of having to deal with VAT and duty compliance in up to 27 counties may be prohibitively expensive and they will just have to stop trading with these customers Have the local consumer become responsible for declaring the VAT and duty similar to the procedures for tax collection on parcels purchased from non-EU suppliers currently. This would make buying from UK businesses less attractive.
Finally there are simply not enough customs duty consultants to provide advice and not enough import/export agents to deal with the additional 140k+ new businesses that will be transitioning from acquisitions/despatches to making customs declarations for imports/exports post exit.
The details required for the evidence for export can be more onerous than for despatches, and we would anticipate that businesses new to exporting will make more errors, exposing them to a VAT liability and penalty risks.
Businesses new to importing/exporting may not have dealt with commodity codes (if they haven’t done Intrastat), origin issues – including finished goods that have components from several countries. These businesses will need education, support and a light touch on penalty risks.
Businesses that are not currently importing or exporting will not have the relevant software to make customs declarations. For smaller businesses, they are unlikely to invest time, resource and money into CHIEF when by the time exit takes place, they may be required to use CDS. Again, they need certainty on the position. What is in place now could well be different by March 2019. Combined with the launch of Making Tax Digital for VAT 2 days after a no-deal outcome, this will put businesses under a lot of pressure in a short space of time.
Opening remarks - John O'Loughlin
John O’Loughlin is an international trade partner at PwC in Dublin and provided an Irish perspective at the roundtable. He started with the complexity of cross-border trade, saying: “If product cannot get to where it needs to get to, products do not move, sales do not get recognised and that has an impact on the economy.” Brexit is ‘very very daunting’ for many companies who are not aware of what to do, for example those who may not have mapped their supply chain. He observed a lack of preparedness in relation to Brexit – companies being afraid to make recommendations because “what if Brexit doesn’t happen? What if it happens if a different way?” While he made that comment from the point of view of his client base in Ireland he imagined it would be the same in the UK and across the EU.
Ireland has ‘a significant reliance on the UK’ in business terms, said John. He noted that most trade is ‘East-West’ (Ireland – England), where there is a hard border, with infrastructure at Dublin port, catering for goods that come from China and the US. If there is a ‘no deal’ that continues to be a hard border for trade with the UK too.
Irish companies have belatedly started to wake up to the need to prepare, said John. “But the problem now is time is running out. We are six months away from a situation where companies can no longer look at strategic planning for Brexit. It’s all now around operational, day one issues… Questions like: How do I get my customs broker engaged? How do I classify my goods? Do I use an inward processing customs warehouse? And do I have the knowledge to execute those solutions? Because most companies don’t have expertise because they haven’t had to deal with cross-border trade. So how is this knowledge going to be embedded within the business to execute solutions, to make sure goods start moving at day one?”
Turning to industries that will be highly affected by Brexit, John highlighted the food and beverage sectors. Duties on food and beverage tend to be quite high – sometimes as high as 60 per cent. “That is going to have a significant impact, not only for the UK economy but for Irish companies that are trying to sell in to that economy.”
Retail duties are high – 10-12 per cent. Ireland buys a lot of apparel from the UK. From a supply chain perspective those goods are often coming through the UK, through a distribution centre – 90 per cent of those goods will stay in the UK, 10 per cent will come to Ireland. If they’re coming from the far east you have a duty from the far east, you have a second duty when bringing them into Ireland. “Unless, from an Irish perspective, UK businesses are putting in facilitation measures, UK goods on the Irish market will become more expensive. What impact will that have for UK industry trading in Ireland?”
John endorsed Daniel Lyons’ pharma example (see above), adding that the regulatory side is also relevant. “From a regulatory perspective a non-established company looking to import may not be able to do so.”
“From a trading perspective in Ireland we have 1.5 million declarations annually through the customs system. That’s going to increase to 33 million – a 30-fold increase in terms of the number of cross-border transactions. The risk register provides that two per cent of all those consignments need to be physically inspected and six per cent need to be looked at for a documentary check. Now two per cent and six per cent of 1.5 million is quite a high number, but of 33 million it’s a huge number. Which raises the issue around non-tariff barriers. What are we facing in terms of delays and risks posed by non-tariff barriers? Tariff barriers are easy to quantify: it’s duty, it’s cost (by virtue of either import VAT or customs compliance. What about the delay that’s caused by agricultural inspections? By the regulatory authority for pharmaceuticals? In a recent conversation I had with someone at our health and safety ministry in Ireland, even though the customs authorities may facilitate the moving of goods through the ports, it’s nearly a case of ‘ready, steady, stop’ because now another authority takes over and they have to carry out their risk assessment. So customs is one aspect of Brexit but other government agencies have been significantly overlooked.” While his was an Irish perspective he thought the same issues would apply to the UK.
The contractual terms under which UK and Irish business trade were not designed for cross border trade, but for intra-community trade, he said. Complexity may fall on Irish businesses. Take a small artisan cheese manufacturer in west Cork, for example, selling to a large UK supermarket chain. That supermarket will expect them deliver, duty paid, on a Monday morning. “As an Irish supplier, what does that mean to me? One, I am now an exporter out of Ireland. I have to register with Irish Revenue with all the formalities that entails. I now, if I deliver on a duty paid basis into the UK, have to register with HMRC, to put in a mechanism to import, a mechanism to pay my VAT and my duty if they are applicable, I have to engage a customs clearance agent, and I have to deliver customs clearance. From a VAT perspective if I have import VAT I probably have to register for VAT, I’m going to have my VAT returns and all the compliance associated with that. So as a small artisan cheese manufacturer in Cork does it now make sense for me to sell in to those companies? That is an open question.”
Finally John complained about the lack of clarity from the UK and the EU about how ‘North – South’ (NI to Irish Republic) trade will work in the future because there are contradictions from both sides. “The contradictions are leading to a huge element of stagnation, while allowing no planning.”
He concluded, “Brexit, overall, is just bad news. It is bad news for our businesses, it is bad news for our respective economies… There are going to be a lot of issues that just come up at the last minute, which is going to cause delays at the borders, meaning companies cannot get their products to market in a timely manner.” Business does not move quickly, contrary to popular belief, and ‘is not open to quick change’.
Alan McLintock said that with complex supply chains come complex billing systems. “Your physical movement of sales of goods aligns with your invoicing for those goods. But on day one after Brexit, if a French port is jammed our logistics guys can change and bring them through Rotterdam but our billing systems can’t reflect changes easily or quickly. Our goods will be going that way, our billing systems this way… I’m dreading what might happen if we have ‘stop going there, start going there’, ‘stop going there, go back to this port, we’ll get it in three days earlier’…” He worries that we could end up potentially with the risk of incorrect invoicing because you’re invoicing a longstanding logistics movement into say France or Belgium, but you bring the goods through a Spanish port or a German port because vehicle parts get through quicker (and thus invoicing/tax reporting no longer match physical movement). His firm would not do that, or if they did would seek to immediately clear it up, but there is so much invoice volume that trying to correct it… “It’s already like the M4 at rush hour, now you’re trying to do credit notes coming the other way, and then replacement invoices going backwards while you’ve still got that day’s transactions, so that in itself would be a stretch that makes me feel my job would be completely secure!” [Laughter from others]
Kirsty Blackman MP (SNP) asked about Brexit Day One and how the ‘big bang’ will look in March 2019.
Daniel Lyons said there are transitional provisions for goods that are already in transit, to deal with immediate problems.
Alan McLintock said that, on the new CDS system, his firm can make entries, so at one level they can make import and export clearances. He said that there has been some talk that if it comes to ‘revenue or trade’, the suggestion was you would just lift the barriers and let trade come though. Big companies will be ethical in their reporting and tax liability determination and payment behaviour whether their lorries are stopped or not, he added. But even if the UK takes such a light touch, it still relies on other countries doing the same. Another question was: Will Brexit start on Brexit Day? Brexit is probably going to start about February, especially for small products that can be stockpiled, he thought.
Jeremy White said that the transit shed capacity of Heathrow and the speed of the third country goods that pass through there exceeds the capacity of Dover, so in reality the UK can manage high volume, high value goods from third countries which France, say, will be after Brexit day. Will we reduce controls? The controls will still exist but we might not apply them, he speculated. “We have a hard border with Ireland in terms of excise goods… and we manage that quite well with current excise control systems, which we all share. But what happens in the future comes down to the application of resources to make sure all these trade facilitation measures are going to be in place on day one of Brexit, whatever kind it is. It really is a system of winners and losers. Those people who prepare in advance – in Alan’s case he’ll have the trade facilitation measures, the maximum that are available in Europe, so can move goods into any member state he likes, or from any member state he likes, and account for them only once in one member state - the hub and spur illustration. People who are now working on that, will have to today make sure they have AEO authorisation and put political pressure on HMRC and through their representatives, to make sure HMRC delivers on trusted trader schemes as soon as possible, ideally now.”
Alan McLintock added that his firm is speaking with both HMRC and the Dutch tax authorities. Their plan still involves systems changes. Most scenarios involve significant costs.
Sammy Wilson MP (DUP) asked about Northern Ireland, stating that the Irish border issue has been blown out of proportion. We already have a hard border between Ireland and GB, he said, and there is a huge amount of trade that crosses that border which does have to have taxes collected, and it happens seamlessly. He noted that there is already a template in place for the UK dealing with third countries with, according to evidence given to the Brexit select committee, less than one per cent of that trade being checked. “What is the difficulty, if there is already a template in place for dealing with third countries, why is that template not easily transposed to be placed on trade between GB and Ireland, and secondly, on trade across the Northern Ireland-Irish border where there are different customs rates, different VAT rates, in many cases different regulations as well, and yet the trade is seamless at present, why can’t those arrangements, once we become a third country, simply be transposed again on trade between Northern Ireland and the Irish Republic?”
John O’Loughlin responded that the big issue is the volume of trade between UK and Ireland. From an Irish perspective, you’re not treating the UK any differently from the US and China, you’re actually putting them in the same basket, but it’s the scale that is significant. The UK will no longer be in the single market and the customs union, so ‘North-South’ trade cannot be treated the same, as NI will be a third country, unless the backstop is put in in some way that means Northern Ireland is not treated as a third country, but that seems unlikely. So there will have to be some kind of customs control, whether they are at the border, or whether the border is actually extended down to the trader’s premises, but the understanding is there will be a border of some type.
Sammy Wilson responded by saying that the principle of collecting taxes without a need for physical checks on the border frontier has already been established and can be done seamlessly.
Jeremy White agreed that we have mechanisms but only for a certain volume and we tolerate a certain amount of friction, but in the future we will see an increase in that and also new entrants - people who may not be even VAT registered. “There is a solution but it involves a lot of training and it probably involves a ‘bilateral’ between the Ireland and the UK that is granted by the EU Commission. We would never be able to get agreement with the whole of the EU27 for the kind of facilitation that is possible; imagine a VAT return with a few extra boxes; in postponed accounting periodic but with the EC Sales list and introstat information being in a VAT return. We could do that for Ireland, and the UK traffic, that mechanism is there, and on the customs side it is using the ideas of AEO, trusted trader, self-assessment, pre-arrival declarations. It would also require a database of origin. We could agree to pay for that in the UK, with Ireland, and that would remove friction. But the main problem is, even if we go straight into that, the volume of people who do not know what they are doing, and that will cause a lot of friction and difficulty. The solution could be just to say ‘they ought to comply with the law’, but it will come in the three years after, the audits come and they discover that everyone’s made a mistake, in which case the friction will find its way into the tax courts instead of at the borders.”
Baroness Susan Kramer (Lib Dem) said that, as she understands it, a lot of the goods from the 26 make their way to Ireland via the UK, and no-one knows until late in the day how many goods will stop in the UK and how many will go on to Ireland. You have the UK acting as a distribution point. Also, all of the declarations you have described for third countries carry a huge amount of paperwork associated with them which involves cost. Those have never been loaded onto the trade that goes between the UK and Ireland. It is between 4 and 15 per cent of the price for those goods which are involved.
She is also concerned about the amount of fraud on the NI-Ireland border today, around those issues which currently form the border, such as VAT fraud she has found ‘on industrial scale’. There are criminal gangs running those operations who may be looking to expand their operations. This makes her sceptical of how well cross border trade works. She said that many parliamentarians lack understanding of the complexity of the transactions of the system we are moving from, to the system we are moving to. She would like more information and examples about the costs of the ending of the current regime. A lot of these would apply even under the FCA, she understood.
Daniel Lyons replied that, with regard to goods coming in to the UK from outside Europe, some of which are going to go on to the Irish Republic, is a good point and the FCA may well cope with that to the extent there are trusted traders and obviously the higher rate of duty would be paid if there was no certainty that the goods were going to remain in the UK.
Susan Kramer said that there would still be additional costs compared to the current situation.
Jeremy White said yes, there would be, even if were just to fill in a form to say the goods were going through the UK to Ireland. How much would depend upon how much facilitation the member states can provide. There is a problem with the FCA in that it’s only unilateral, so we promise to collect EU duty on third party goods coming in but it doesn’t work the other way round. Daniel Lyons interjected that the Taxation (Cross Border Trade) Bill had legislated to require reciprocation.
Kirsty Blackman said that discussion had focused on customs and VAT but there were other issues around non-tariff barriers such as phytosanitary regulations and, if you transport, say, a car seat across the border it has to comply with all sorts of regulations.
Jeremy White replied that under the FCA, governments and companies will have to maintain databases of both countries’ tariffs and regulatory controls, which will increase costs. He added that we will have to maintain these ‘dual tariffs’ for movements going either way and maintain them for long enough for the goods to ‘complete their life’. The FCA talks of a ‘robust’ demonstration of the destination of these goods, which he doubts can be determined; the ‘robust’ demonstration is just a process point, he added. In reality, these goods can be easily diverted easily and if there is a profit to them they will move on to the next place, he said; if they do, and only the lower duty has been paid, how is the higher duty going to be paid next?
Daniel Lyons wondered, from a regulatory point of view, to what extent a common rulebook would solve that problem. Jeremy White asked how wide the common rulebook would be. Are you going to include all of the tariff barriers? Anti-dumping duties? Subsidies? Are we going to have the same view as the EU on Chinese goods? Do we have a different view to the Germans on polymers coming in? The Germans, because of industry considerations, don’t want polymers coming in duty free. We don’t have the same industry considerations so we do want them coming in duty free. So the common rulebook is a nice description only.
And that’s before we have a trade deal with the US who will want us to adopt different rules, added Kirsty Blackman.
Lord Larry Whitty (Lab) said on a visit to Dover he had seen that, even at a low level of full inspection of third country imports, checking one or two per cent effectively, spread over the whole lot the average delay was 20 minutes as against less than one minute for EU traffic. That is a measure of the congestion problem and the cost problem, he said. Regarding a new deal I think one of the most likely outcomes is we have a ‘cheap and nasty’ deal, or at least a cheap and unclear deal, and we try to work it out over the transition period. The EU won’t buy the Chequers proposition, but there will be something within that territory which the withdrawal treaty will say we will sort out in detail later. That means that the crunch doesn’t come in March next year but on present form it comes at the end of 2020. Given what has been said about the EU’s progress towards their new customs system, and that not just customs but all the other government departments have to change their procedures, is the current transition period long enough for the authorities and industry to sort out a new system for 2021/22?
Alan McLintock said that if industry is told on 1 April 2019 what the situation will be in January 2021 that ‘give us a decent run at it’. But in reality any transitional period might not feel that much different from now....uncertainty over the future and insufficient time for business to change systems or processes.
Daniel Lyons said that with an extended period to 2020, sophisticated business such as motor manufacturers will cope ‘with a certain amount of pain and cost’ – but he worries about the 150,000 businesses that Jayne Simpson spoke about in her speech.
Glyn Fullelove closed proceedings. He said that we shouldn’t lose sight of the fact that cross-border trade is inherently complex. What the EU has done is made that a lot simpler within the EU, and after Brexit it is going to get a lot more complicated. Larger businesses are already committing significant resources to the issue but are finding it’s costly. It appears governments are not throwing adequate resources at it, whether they’re this side of the English Channel or the other side (though the Irish government is clearly very focused on the issue). An awful lot more is going to have to be put in place if we are going to be able to get any kind of simplicity back into cross-border trade with Europe after we leave the EU. Small businesses just haven’t got the resources at the moment to deal with it – they’re dealing with other things. We may end up with small businesses either feeling they can’t trade with the EU any more, or trading illegally (and the same for small EU businesses trading with the UK). That’s a significant risk. So the panel thinks the parliamentarians have got quite a lot of work to do!
Kirsty Blackman thanked the panel for attending the 5 September 2018 event, and said the briefing had provided helpful insight.