Wednesday 30 March 2022

Brexit: Works best when it's not implemented

We are apparently looking at delaying yet again carrying out checks on goods entering the UK from the EU among “fears of a supply chain collapse” according to the FT this morning. I must say this doesn’t surprise me in the least. This is being argued for inside government by Rees-Mogg and Lord Frost. Shane Brennan of The Cold Chain Federation says applying full SPS checks from July would lead to a ‘collapse’ in supplies to UK retailers who rely on frequent deliveries of fresh food.

This is because of worries that EU exporters won't want to bother with filling in all the forms - even if they're electronic by 2025 as JRM hopes - and will simply focus on the internal market, leading to a shortage of foodstuffs.

This is the article but behind a paywall I'm afraid:

Lord Frost who negotiated the TCA where it was agreed we would apply checks after a grace period which we have already extended three times, tweeted:

Note the bit at the end where he suggests that we “Stop pretending we must do what the EU does, & get right such limited controls as we do need.” In other words let’s not bother at all and just carry on as we are now.

This is not going to be greeted well by our exporters. James Withers, CEO of Scotland Food & Drink told the FT, "There's no doubt it will stick in the throat of a lot of exporters who are now 15 months in to navigating a tsunami of paperwork that our EU competitors are not facing."

So, Brexit, far from helping us to export, is throwing open our doors to European and world competitors while hobbling our own farmers and exporters by erecting barriers to our largest overseas market. It is utter madness.

On the same day I noted this article on The Loadstar about the potential loss of VAT on imports.

Because implementation of new declarations last year was delayed, it is being claimed that the exchequer has missed out on VAT payments worth £30bn during the six-month (175-day) delay between 1 January-1 July 2021.

The figure comes from the head of international trade and customs at Fujitsu, Frank Dunsmuir. Fujitsu apparently hosts the CHIEF customs declaration system and they say on average across the world each container has nineteen (19) declarable items. 

But Mr Dunsmuir said, “looking at the numbers, four million declarations coming off six million trucks, something’s gone wrong. Internationally you have about 19 consignments per container so they should be looking at between 100 million and 150 million, but it could be as high as 400m [missed declarations].”

I assume the 6 million trucks comes from all EU ports including Irish ones. On busy days Dover handles about 10,000 and the Tunnel another 5,000 so. In a 175 day period, six million works out at 34,000 trucks per day which must include Hull and all the rest.

So, where the UK is averaging less that one declaration per consignment, the rest of the world averages 19. See the problem?  The article goes on:

"Subsequent efforts by HMRC to track down the missing income have stepped up, but the customs expert suggested it would be 'difficult' for most of these to be brought to account.

“The issue is, whom do you chase? I know HMRC wrote to UK importers at the end of last year and advised them to report anything not declared, but if those companies had responded, customs houses would have been flooded with requests,” said the customs expert.

"That has not happened, so HMRC 'might as well have written to Santa and asked him to fix the problem as its Christmas wish'."

And this is the key one:

"Ignoring lack of compliance by UK companies, the customs expert said the 'real problem' lay with overseas companies responsible for import, noting that any shipments sent delivery duty paid (DDP) would have been the responsibility of the overseas supplier.

“HMRC probably hasn’t contacted these companies and I think this is where the real problem lies,” explained the customs expert.

“If Border Force can identify who has not submitted declarations, maybe based on EU export data if it can be shared,” he said though he thought this unlikely, though he said, “they could write to them and ask for the declarations to be submitted.”

This refers to EU exporters who quote delivered, duty paid prices (DDP) to UK customers and in theory the exporter is responsible for completing the declarations - but they don't do it and may not want the hassle or if they do, it will come at a higher cost.

As professor Chris Grey tweeted:

How true. It was OK in theory, eh?

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