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Lord Wolfson warns of customs delays after no deal Brexit

3rd Oct 2018
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Felixstowe
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With time running out to strike a deal, Next PLC’s chief executive has warned that a no-deal Brexit could bring Britain’s ports grinding to a halt.

Lord Wolfson, a prominent Brexit supporter and Conservative life peer, spoke as Next announced its Brexit contingency plans. Wolfson urged the government to give businesses greater clarity on how a no deal scenario would be managed.

A recent HMRC letter to VAT registered businesses addressed the reality of a no-deal Brexit. The letter, written the tax authority’s deputy chief Jim Harra, said the government’s priority “is maximising stability at the point of departure”.

Although the letter acknowledged that no-deal would mean “customs, excise and VAT procedures”, it fell well short of outlining any sort of contingency plan for dealing with the fallout.

As Jason Hunter told AccountingWEB, “At 11:01pm on 29 March, if you have goods in transit and you don’t have the paperwork prepared, it’ll get stopped as soon as it hits an EU border.”

It appears as if Wolfson shares Hunter’s concerns. Next’s 11-page Brexit report said the risk of “queues and delays” at UK and EU ports as a result of “increased customs declarations for other companies” was high.

Next’s 11-page report is a sober look at the indirect and direct risks. “The biggest risk to businesses, isn’t tax or duty – it is that the ports won’t work,” Wolfson said in a statement accompanying the report. “The government needs to alleviate the pressure on ports and the volume of work carried out there.

“It is a risk beyond our control but there is lots of time to make sure the ports run smoothly. If the ports stop working, it will be a problem – we are always running out of our bestsellers. If we have to do with EU stock what we currently do with non-EU stock, we won’t have any issues but we need to streamline import processes.”

The Next report outlined three steps the government could take “to speed up the processing of in-bound traffic” and “reduce the volume of work required at our ports and airports”:

  • Temporarily raising import thresholds for goods bought into the UK by small importers so that they avoid customs procedures.

  • Implement the kind of self-assessment tax procedures for customs tariffs and duties that mirror other UK taxes such as VAT. The government trusts businesses to collect £125bn of VAT through self-assessment, so it would seem reasonable to trust them also to collect £3.5bn of duty in the same way. We believe that this would push much of the administrative burden back from the points of entry to UK and do much to alleviate pressure on UK ports.

  • Extend temporary trusted trader (or authorised economic operator) status to many more importers through a simplified and less burdensome application and certification process. This status allows certain checks on vehicles, drivers and customs classifications to take place inland or at a later date rather than at ports.

Despite these warnings and suggestions, however, Next (and by default Wolfson) remain bullish in its assessment of Brexit. The company said a no-deal outcome would not pose a “material threat” to Next’s operations or profitability. In a worst case scenario, it said, it would add “+0.5% to [Next’s] prices at most”. “In reality, some of these additional costs would be shared with suppliers or eliminated through alternative sourcing routes.

“We are well advanced in our preparations and are setting up all the administrative, legal and physical infrastructure that will be needed to operate effectively if the UK and EU are unable to agree a free trade agreement. We are confident all the necessary arrangements we need to make will be in place by March of next year.”

Replies (19)

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By tom123
03rd Oct 2018 16:24

I like your picture of Felixstowe - we visited that on holiday last year..

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Replying to tom123:
Tornado
By Tornado
03rd Oct 2018 16:34

Yes, I went there recently and there is hardly a person in sight. The cranes are constantly in motion and the containers are being moved about from place to place with what appears to be relentless efficiency. Whatever the customs system that is being used at Felixstowe, there appears to be nothing that holds up the constant loading and unloading of container ships.

I would guess that such a system would work just as well after Brexit, but I appreciate the need to ensure that appropriate changes to the software are made in time to account for a different way of dealing with imports and exports to and from EU members.

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By ireallyshouldknowthisbut
04th Oct 2018 09:09

@tom, I used to work in the industrial estate down the road in my industry days. And there was always folks going up to the viewing area to watch.

Now I know who it was!

I prefered walking along the beach at lunchtime myself, especially on a windy day when the sea was up.

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By ireallyshouldknowthisbut
04th Oct 2018 09:11

In other news, bears still pooping in woods

Pope in the religion business.

And we have no chance in hell of implementing major structural changes to imports in less than 6 months.

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By Knight Rider
04th Oct 2018 09:42

Some sensible suggestions from Lord Wolfson.
Containers from outside the EU seem to come in and be processed perfectly smoothly so perhaps we could deal with EU imports in the same way. Import problem solved.
As for exports any 'friction' rather depends upon our EU friends. We could simply change the terms of sale from DDP to FOB or ex works and leave their Airbus wings propped up against the portaloos on the M20. Hopefully common sense will prevail.

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By AndrewV12
04th Oct 2018 09:54

Now Francois if you would have watched the Conservative party conference you would have been heard Mrs May bark out 'Our best days lay ahead of us'

Mind you she did not give a date

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By johnjenkins
04th Oct 2018 13:01

30th March 2019

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By Environment
29th Oct 2018 12:34

Ironic sense of humour!

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By Environment
29th Oct 2018 12:33

Did not one prominent brexiteer in the Tory party say that they are in 50 years? In other words 29th March 2068.

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By pauljohnston
04th Oct 2018 11:15

The cynic in me asks are the best days ahead of us when the country is run by someone else?

Nice pictore of Felixstowe so much more interesting than Brexit. Cant wait for 1 April (my Mums 90th birthday) when we will also see what transpires. It also means that there will be something new to talk about.,

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By johnjenkins
04th Oct 2018 13:11

What about the day trips to Calais? Will the ferries be allowed to dock? Will they demolish their end of the chunnel? (what will the illegals do?) Can we now call all our chocolate bars what we want to call them? Ciff will be a thing of the past.
Exciting times ahead.
Francois can we call you Frank from 30/3/2019? (joke)

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By Knight Rider
04th Oct 2018 16:14

Perhaps some people will be surprised that we can build cars,fly aeroplanes and go on holiday in April next year just like the 95% of the world that isn't in the EU already.
If we can go on duty free shopping trips in the Channel and buy a marathon and a quarter of sherbet lemons so much the better.

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By johnjenkins
05th Oct 2018 13:11

The icing on the cake (notice not patisserie) will be that our hoovers can go as fast as they like. MultiGig horsepower. You've got the picture, TM with her souped up Dyson swanning around number 10 to Kim Wilde's "you keep me hanging on"

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Replying to johnjenkins:
By ireallyshouldknowthisbut
05th Oct 2018 15:13

Why do you suppose sensible legislation to reduce domestic appliance power use will be reversed?

And even it it is, why do you suppose anyone will manufacture appliances that can only be sold in the UK and waste electricity/are extra noisy?

its bizarre quite frankly that people give a stuff about the power output of their vacuum cleaners. Its such a petty thing to worry about.

I think you are going to be bitterly disappointed John about this glorious new dawn.

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Replying to ireallyshouldknowthisbut:
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By johnjenkins
05th Oct 2018 15:46

Oh dear. I think you've just burst my little bubble, best I get back to the drawing board (English Oak, of course).

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By Knight Rider
09th Oct 2018 14:29

Cars are made in Europe for the UK market - why shouldn't toasters or Dysons be made for the UK market? Low powered vacs might be OK in Greece or Cyprus where everyone has tiled floors but are not OK for my 2inch pile Kidderminster carpet. A low powered toaster will take longer to make toast so will not use less power.
Perhaps the Eu should worry a bit more about stemming the tide of illegal immigrants through its southern borders and a bit less on petty legislation over light bulbs and enforced metrication. If it had the UK probably wouldn't be joining the 90+% of the rest of the world which is outside the EU.

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By johnjenkins
09th Oct 2018 18:56

Who would love to see Junker and May in strictly? Certainly no kisses there.

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By Environment
29th Oct 2018 12:38

This is all total madness that will grind the entire economy to the halt. Proud to be have been one of 700,000 in central London week last Saturday. Let's have a People's Vote to stay in the EU.

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Replying to Environment:
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By johnjenkins
29th Oct 2018 13:12

We've already had a people's vote and we voted to come out of an inflexible, archaic, dictatorial Union that doesn't work and will collapse (unless it changes radically) once we're out (Italy and Hungary will follow soon after).

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