LONDON \u2014 One of the governments proposed models for a new customs arrangement with the EU would cost British businesses up to \u00a320 billion a year, the head of the U.K. tax authority said.<\/p>\n
Jon Thompson, chief executive of Her Majestys Revenue and Customs, told MPs that ministers had been briefed on estimates, which suggested that under the maximum facilitation or \u201cmax fac\u201d customs model, the burden of carrying out customs declarations and rules-of-origin checks on imports and exports with the EU would be between \u00a317 billion and \u00a320 billion.<\/p>\n
The model would mean the U.K. leaving the EU customs union but making borders as frictionless as possible by using technology and other administrative methods such as assigning authorized economic operator status to more traders.<\/p>\n
The estimate is based on a base line of 200 million trade consignments with the EU, based on 2016 figures, at an estimated cost of \u00a332.50 per customs declaration. Thompson said this should be doubled because declarations would be required on the EU side as well, and then \u201cseveral billion pounds more\u201d added depending on what kind of rules of origin checks would be required under the U.K.-EU trade arrangement.<\/p>\n
\u201cMax fac\u201d is favored by Brexiteer Cabinet ministers including Foreign Secretary Boris Johnson, Brexit Secretary David Davis, Environment Secretary Michael Gove and International Trade Secretary Liam Fox.<\/p>\n
Anastassia Beliakova, head of trade policy at the British Chambers of Commerce said that the prospect of extra costs was not a \u201chappy prospect\u201d for companies. \u201cHaving to do customs declarations is the logical consequence of not being in a customs union with the EU \u2014 but news of the cumulative cost is now coming as a shock, as we have not yet had anything close to practical guidance explaining what either of the governments proposed customs options will mean for businesses.<\/p>\n
She said businesses wanted time to plan. \u201cMany firms will have to rethink their logistical and financial arrangements, or accept absorbing these costs \u2014 none of which is easy \u2014 but above all, they want to know what to start planning for. Until there is a firm decision on the future customs relationship, this is impossible to do.\u201d<\/p>\n
A Downing Street spokesperson said the figures outlined by Thompson are \u201cspeculation.\u201d<\/p>\n
Thompson added that under the governments alternative proposal, a customs partnership with the EU, which Prime Minister Theresa May is reported to favor, the net cost to businesses could be \u201czero or less.\u201d That option would involve the U.K. collecting tariffs on the EUs behalf and then refunding some importers depending on where the goods were destined.<\/p>\n
The HMRC official also told the committee that the max fac model would take three years to implement from the moment a final decision was made by ministers on whether or not to pursue it. The customs partnership model, he said, would take five years to put in place.<\/p>\n
However, he said that the U.K. would be able to operate a \u201cfunctional border\u201d in January 2021, the time at which the post-Brexit transition period is due to end. During that period, the U.K. will remain subject to EU rules and will effectively remain within the single market and customs union.<\/p>\n
If neither customs model was fully implemented by the end of the transition \u2014 which according to Thompsons timescales neither could be \u2014 ministers would have to \u201cmake some choices,\u201d he said. In the initial months post-transition there would be trade-offs between \u201cthree fundamental objectives\u201d at the borders, he said, adding that those were \u201cfree flow [of trade], revenue [from customs] and security.\u201d<\/p>\n
Summing up, committee chair Nicky Morgan, a former Cabinet minister who is a leading advocate of agreeing a customs union with the EU after Brexit, asked Thompson whether it would be \u201ca relief\u201d if parliament voted for such \u2014 avoiding the need for a new customs arrangement.<\/p>\n
\u201cThats for parliamentarians to decide,\u201d Thompson said.<\/p>\n","protected":false},"excerpt":{"rendered":"
LONDON \u2014 One of the governments proposed models for a new customs arrangement with the EU would cost..<\/p>\n","protected":false},"author":1,"featured_media":79859,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[202],"tags":[],"class_list":["post-79858","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance"],"yoast_head":"\n