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Brexit customs costs lower than first estimates

lorries at Dover
There have been fewer customs declarations than expected

Britain’s exit from the EU has cost companies much less in additional red tape than was original expected.

A 2019 estimate put the cost of completing customs declarations in trading with the EU at £7.5 billion a year.

However, HMRC’s forecast of the number of declarations it would receive was “significantly greater than that which materialised”, according to a report from the National Audit Office.

This is a result of traders and their agents changing their behaviour and has led the NAO to downwardly revise its estimate of the total cost of the additional paperwork.

It had expected the number of customs declarations to leap from 55 million to 270 million. The last available data from 2022 shows HMRC received 95 million declarations – a third of the expected total – of which 39 million related to EU trade and 55 million related to trade with the ROW [rest of the world].

“HMRC told us that the primary reasons for its over-estimate included changes in behaviour by traders and intermediaries, such as submission of fewer declarations for more items, and a lack of detailed information about levels of trade with the EU prior to EU exit and how this would translate into declarations.

“The lower than anticipated number of declarations means that HMRC’s updated estimate of the total annual cost to businesses of making customs declarations on goods moving between the UK and the EU will likely be significantly less than £7.5 billion.”

The report states that Brexit has still cost the taxpayer an additional £4.7bn setting up the 13 most significant programmes to manage the passage of goods across the border.

However, it states that “this cost primarily relates to putting in place the infrastructure and systems required to manage the border in the context of EU exit, and wider programmes to improve the performance of the border, elements of which would have been necessary even if the UK had not left the EU.”

On the rate of progress, the report states that: “More than three years after the end of the transition period, full import controls are still not in place. Although departments appear to be on course to introduce most of the remaining controls during 2024, there remains uncertainty about when full… controls will be in place.”

It says the government has delayed implementation of the remaining controls five times, though the government has blamed the Covid pandemic during the initial transition period which meant giving businesses more time to recover, and the subsequent cost of living crisis.

Despite the NAO’s admission that customs costs had been over-estimated, the SNP insisted that Brexit is doing untold damage to Scotland’s economy.

Commenting, SNP MP and International Trade Spokesperson Richard Thomson said: “Brexit is causing long-term damage to Scotland’s economy, harming trade with our biggest international trading partner and piling ever-growing costs on Scottish businesses.

“This is holding back our economy and businesses, who are already grappling with the consequences of woeful economic mismanagement by Westminster.

“With the Tories and Labour wedded to the long-term economic decline of Brexit and backward economic policies that hamper growth, Scotland must look beyond broken Britain to a brighter future.”

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