The UK government has repeatedly changed and deferred its plans for the introduction of full import controls following the UK's exit from the European Union (EU). Brexit caused significant changes to how goods and services are traded between the two territories.
However, it is almost three and a half years since the transition period ended and the UK's government has still not specified when it intends to have a full regime in place. Here we take a look at the changes and what they mean for UK businesses.
Voiced concerns
The government is currently operating a partial import control regime after delaying the implementation of full controls five times. It also estimates that it will have spent at least £4.7 billion to implement new arrangements and improve the management of the border but this does not take into account the costs and disruption to business.
The British Chambers of Commerce (BCC) has repeatedly voiced its concerns over the customs checks and charges that come into force at the end of April.
The second phase of the UK's Border Target Operating Model introduced charges of up to £145 for imports of plant and animal products. It was the first time for decades that firms needed to pay such fees for EU imports of goods arriving in Great Britain.
Government figures show the UK imports just under 30% of all the food it consumes from the EU.
Costs and clarity
William Bain, Head of Trade Policy at the BCC, says: 'Firms face mounting confusion and uncertainty about exactly how and when the borders checks and costs will be fully implemented. It is crucial for business and trade that the government gives clarity on what is happening.
'While the government did consult on the new charges being introduced it chose not to listen. The size of these costs shows scant regard to the interests of either businesses or consumers.'
SME exporters in the doldrums
Brexit, combined with the pandemic, have left most SME exporters struggling to boost sales in the first quarter of 2024, according to research conducted by the BCC.
Almost a quarter of SME exporters saw sales decrease during this period while over half saw no change, the BCC's data shows.
More than half of all SME exporters (53%) saw no change in overseas sales, and 23% reported a decrease.??
The BCC says the proportion of businesses reporting decreased overseas sales began to rise in the run up to Brexit and has remained stubbornly higher ever since.????
Fix the barriers
Bain adds: 'Business needs to work with government to put in place a framework that makes use of all the advantages the UK has, to keep us at the top table, and to access incentives for our exports overseas.??
'We must also look again at fixing some of the growing trade barriers with the EU. It is still our biggest trading partner, but firms continue to express huge frustration with the complexity and costs involved.'
Repeated delays
The costs and inconveniences to businesses of the government's repeated delays were laid bare in a recent National Audit Office report.
It said that late announcements about policy and uncertainty about the implementation of controls have also reduced the ability of businesses and ports to prepare for changes.
According to the NAO, although post EU exit border processes have operated relatively smoothly, businesses trading goods between the UK and the EU have faced additional costs and administrative burdens.
New controls are set to be introduced this year relating to sanitary and phytosanitary (SPS) goods and safety and security declarations. When fully implemented, these controls will cost traders an estimated £469 million a year, according to the NAO.
The report also warned that loss of access to EU surveillance and alert systems reduces the UK's awareness of impending dangers like African Swine Fever.
Realistic approach
Gareth Davies, Head of the NAO, says: 'The UK leaving the EU created a large-scale change in arrangements for the movement of goods across the border. However, more than three years after the end of the transition period, it is still not clear when full controls will be in place.
'The border strategy has ambitious plans to use technology and data to facilitate trade while managing risks. To achieve its objectives, government requires strong delivery and accountability – including a more realistic approach to digital transformation – together with effective monitoring to enable future improvements.'
How we can help
New customs controls and costs have an impact on many businesses across the UK, we can help you plan for tax, administrative and cashflow changes. Please contact us for further advice.