The New Year Could Mean Disaster for Small Businesses Hit By Post-Brexit Customs Checks.

 

The new year could be a far from happy one for small businesses thanks to the introduction of full post-Brexit customs checks and changes to VAT set to be introduced on 1^st January.

 

The Green Party has called for the UK to begin negotiations to re-join the EU customs union and for small businesses to be offered free support from trained advisors [1].

 

If this does not happen the party warns there will be a risk businesses will be overwhelmed by increased, paperwork, and disruption to supply chains. A situation that could be made worse by a return to lockdown in one form or another.

 

Green Party Deputy Leader Amelia Womack said in a press statement “The new customs and VAT measures from January 1st will increase costs, paperwork and supply chain issues at a difficult time of year for many businesses. January will potentially be even more difficult than usual due to tougher covid restrictions and the possibility of a ‘circuit breaker’ lockdown.”

 

A survey conducted for the institute of Directors (IoD) and reported in the Guardian earlier this month found that 37% of the small businesses polled were not ready for the coming changes, worryingly a number were not even aware they are set to take place.

 

Speaking to the Guardian Kitty Ussher chief economist at the IoD said this is likely to “exacerbate existing supply chain problems, leading to further congestion at ports, as well as extra costs from accidental non-compliance for many businesses. Government needs to ramp up an awareness and advertising campaign around these changes, simplifying the guidance, so that all importing businesses feel confident they know how to keep supplies flowing into the new year” [2].

 

The extent to which small businesses are unprepared for the impact of changes to the customs and VAT regimes linked to Brexit is confirmed by research published by the Federation of Small Businesses (FSB).

 

This found that 25% of small importers likely to be impacted by the changes said they were aware of the changes, despite being affected 33% of the businesses that responded said they were unaware of the changes until alerted by the FSB, 16% said they were aware of the changes, but were unable to make adequate preparations [3].

 

Amelia Womack said the survey showed that “Businesses consider the UK’s new trading relationship with the EU to be their number one challenge, ahead of skills shortages and the economic climate”

 

Adding that, “The UK’s trade deal with the EU is the first in modern history that creates more rather than fewer barriers to trade.” 

 

FSB national chair Mike Cherry told industry news service Supply Management they were “urging the government to do all it can to raise awareness, with our support, through every channel available to it in a climate where a lot of small firms simply don’t have the cash or bandwidth to manage this new red tape.”

 

He criticised previous government support packages such as the SMA Brexit Support fund for being overly bureaucratic and having eligibility criteria and application timeframes that were too narrow.

 

What was needed, Mr Cherry said, was “an Import Support Service to empower firms with the guidance and information they require to successfully navigate global trade as it evolves.”   

 

It was clear, she said, that the problems looming for small businesses would be reduced were the UK to re-join the customs union, including a unified VAT regime.

 

The Green Party were, she went on to say calling on the government to “negotiate immediately with the EU to make this happen. We also want to see small businesses offered free support from professional advisors. The paltry £20 million pot for such support has run dry, but businesses need support now more than ever.” 

 

By calling on the government to re-join the customs union, deal with the problems caused by changes to VAT for importers and to provide extra support for businesses to manage the coming changes the Greens are strengthening their position as the party of small businesses.

A point emphasised by Amelia Womack when she says the impending problems for small businesses show that “the government won the last election on a false prospectus. They haven’t got Brexit done. Instead, businesses are being undone by Brexit. It’s clear that it isn't possible to leave the EU in a way that doesn't damage business.” 

 

[1]https://www.greenparty.org.uk/news/2021/12/21/greens-warn-of-catastrophic-consequences-for-small-businesses-from-post-brexit-custom-checks/?link_id=1&can_id=8bc5e413fe5b14a23ca14eb06da17776&source=email-local-party-resource-standing-in-solidarity-with-small-local-businesses&email_referrer=email_1392299&email_subject=local-party-resource-the-impact-of-brexit-on-our-small-businesses

[2] https://amp.theguardian.com/business/2021/dec/13/a-third-of-uk-importers-not-ready-for-full-brexit-customs-checks-survey

[3] https://www.cips.org/supply-management/news/2021/december/third-of-firms-not-prepared-for-new-brexit-border-checks/