Delays, Fines: the U.K. Details the Costs of Brexit Border

Bookmark

U.K. truck drivers taking goods to the European Union after Brexit could face fines if they fail to comply with a new computer system under government plans designed to avert chaos at the border next year.

Under the so-called Smart Freight System, hauliers will be required to file information electronically and receive approval from the tax authorities before being allowed to travel toward the U.K.-EU border, according to a 206-page government document entitled “The Border with the European Union”.

The rules are designed to stop trucks with incorrect paperwork arriving at ports and causing major traffic queues as well as disruption to companies’ supply chains. They rely on the government getting a new, and so far untested, computer system -- the Goods Vehicle Movement Service -- ready in time. That won’t be ready until July next year. Before then, hauliers will still need permission from the government before moving goods to the U.K.-EU border.

The new procedures are just some of the additional burdens the government says businesses will have to grapple with after Britain’s final split with its largest trading partner at the end of the year. Even if the U.K. and EU manage to sign a trade deal by then, companies will have to fill out new paperwork in the form of customs declarations since the U.K. is leaving the EU’s customs union.

Members of the public are also being warned that if they want to visit the EU, they will require travel insurance that covers pre-existing medical conditions, they won’t be able to use pet passports, and they may face mobile phone roaming charges and longer queues.

Extra Costs

The U.K.’s tax authority has previously estimated that, after Brexit, firms will need to file 400 million extra customs declarations annually, at an average of 32.50 pounds each ($41). That puts the cost of the new Brexit customs paperwork alone at about 13 billion pounds a year.

On Monday, the government started an ad campaign urging businesses to prepare for the upheaval as a survey showed only a quarter of company directors said they were fully ready. The Institute of Directors found 45% were unable to prepare, largely because of the impact of coronavirus, but also because the nature of Britain’s future relationship with the EU remains unclear.

“Of course clarity is welcome, but this clarity isn’t clear,” said Rod McKenzie, managing director of policy and public affairs at the Road Haulage Association, reacting to the blueprint. “They unveil an immensely complex customs plan with five months to go. The truth is we needed 18 months to prepare, not five.”

Separately, Cabinet Office Minister Michael Gove has announced plans to spend 705 million pounds on new border infrastructure. The government is in talks to purchase a 27-acre site outside Ashford, about 20 miles (32 kilometers) from the port of Dover, for “holding” delayed goods vehicles, Gove told Parliament on Monday.

The government is looking to acquire an additional 10 to 12 sites for handling new customs procedures, according to a person familiar with the plans. There may be teething problems and traffic jams as the system is implemented, the person said.

Although Gove emphasized the “opportunities” he said would exist for U.K. businesses outside the EU, ministers are now preparing them for increased costs and bureaucracy. Exporters will soon need to obtain a so-called Economic Operators Registration and Identification number, work out the commodity code for their goods, and calculate their value -- or hire experts to manage the customs process on their behalf.

The government’s proposals won’t apply to freight moving into Northern Ireland, Gove said. The U.K. will set out its plans for checks on goods moving there in coming weeks.

©2020 Bloomberg L.P.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.