The figures come as firms struggle to adapt to the new rules imposed under the post–Brexit trade deal.
Accountancy firm UHY Hacker Young, which undertook the research,
attributes the increase to rules of origin and GB firms’ lack of
awareness that proof of origin needs to be provided to enjoy the
tariff-free trade provided for under the Trade and Co-operation
Agreement (TCA) between the EU and UK, which came into force last
January.
Origin rules determine the economic nationality of your goods and
determine whether goods can avail of preferential rates of duty.
UK trade with the EU and overall has dropped in the two years since
the UK left the bloc, though the bulk of this is the result of the
COVID-19 pandemic.
While the EU introduced customs checks on goods arriving from the UK
at the end of the post Brexit transition period in January 2021, the UK
government has repeatedly delayed introducing its own controls on EU
goods. It now intends to introduce them in phases until November.
The customs figures are likely to increase significantly this year
if, as expected, trade volumes continue to recover from the disruption
caused by the COVID pandemic and as product ‘Rules of Origin’
requirements become even stricter. The figures show that the last five
months to 31 January 2022, as economic restrictions continued to ease,
there was a further surge in duties paid, with over £2.1bn (€2.5bn) paid
in that period alone.
Customs declarations for all standard goods became a requirement from
January when the UK government introduced requirements that importers
show an origin declaration at the point of entry. Failure to carry a
declaration would leave businesses liable to pay the full rate of
customs duty.
Forty-five per cent of British firms reported difficulties adapting
to changes in rules for buying or selling goods, according to research
published by the British Chambers of Commerce, with confusion over rules
of origin requirements, customs duties and VAT cited among the most
common additional burdens.
“One of the great promises of Brexit was freeing British businesses
to give them the headroom to maximise their productivity and
contribution to the economy – even more desperately needed now on the
long road to recovery from the pandemic. Yet the only detectable impact
so far is increased costs, paperwork and border delays,” said Meg
Hillier, the Labour chair of the UK parliament’s Public Accounts
Committee, earlier this month.