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How customs costs could rocket under Brexit

It is easy to imagine an additional cost to UK-EU trade in the order of several billion pounds per year once customs controls are reintroduced, warns a logistics expert.

Reintroducing customs controls on UK-EU trade will have a cost for both business and government, says Andrew Grainger, assistant professor in logistics and supply chain management at the University of Nottingham, in The Conversation.

At present, all goods entering the UK from outside the EU require an import declaration. The most common and practical way of complying is to use the logistics providers carrying the goods as agents. Their range from a few pounds to £25-plus.

Once Brexit is in place, Grainger argues, UK-EU trade will be subject to similar costs and the number of customs declarations is likely to double once Britain leaves the EU.

A corresponding increase in declarations would also arise on the continent since each export declaration at one end of the supply chain is followed by an import declaration at the other.

Soaring cost

“Further analysis is required, but it is easy to imagine an additional cost to UK-EU trade in the order of several billion pounds per year,” he writes.

He cites a number of other factors that could add to costs, including possible physical inspections, which could cost anywhere between £52 and £1,540 per consignment; the need for businesses to comply with additional documentary requirements; and extra staff for Her Majesty’s Revenue & Customs – the UK has about 5,000 customs staff and doubling their numbers could easily cost the government an extra £250 million a year.

Devil in the detail

Grainger concludes: “The overall scale of additional costs still needs to be assessed – on behalf of the businesses that will be affected, but also for HMRC’s development.

“As so often, the devil is in the detail. And unless innovative solutions to cutting the red tape resulting from the UK leaving the EU can be found, end consumers are likely to bear much of the cost.”

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