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Government trade advisers are encouraging British companies exporting to the continent to set up separate companies within the EU to avoid additional fees, paperwork and taxes stemming from Brexit. Observer can reveal.
In an extraordinary twist in the Brexit saga, advisers working for the Department for International Trade (DIT) tell UK small businesses that the best way to circumvent border issues and VAT issues that have been accumulating since January 1 is to register new companies within the EU single market, from where they can distribute their products with much more freedom.
The heads of two UK companies that have been beset by Brexit-related issues have told the Observer who, following the advice of experts from the Department of International Trade, have already decided to register new companies in the EU in the coming weeks, and they knew of many others in similar positions. Other companies have also said that government officials also advised them to register operations in the EU, but that they had not yet made any decisions.
Andrew Moss, who runs Ely, Cambridgeshire-based Horizon Retail Marketing Solutions, which sells packaging and merchandising displays at the point of sale in the UK and to EU customers, will register a European company Horizon Europe in the Netherlands at the upcoming weeks. , with the advice of a senior government advisor.
This will mean laying off a small number of staff here and hiring people in the Netherlands.
Referring to discussions with a senior DIT advisor on trade, Moss said: “This guy spoke with total common sense. What I told him was, do I have a choice? [other than to set up a company abroad]? He confirmed that he could not see otherwise. He told me that what he was thinking of doing was the right thing to do, that he didn’t see any other option. He did not see this as an initial problem. He said he had to be careful what he said, but it was very clear. “
Moss said it is now clear that Brexit is not about regaining control of the EU, but about investing in it to survive.
Geoffrey Betts, managing director of Stewart Superior Ltd, a company in Marlow, Bucks that sells office supplies to UK and mainland customers, said he had also decided to set up a company in the Netherlands for the same reasons.
He had also spoken with an official from the Department of International Trade before making his decision and received the same advice. “When the government said it had ensured free trade, it was obvious that it was nothing of the kind,” Betts said. VAT problems, new freight charges and more bureaucracy added to an “administrative nightmare,” he said.
By moving operations to the EU and sending large shipments from the UK to their new European operations, companies can not only avoid delays and cross-border costs on every small shipment they send, but can also eliminate the VAT problems that are plaguing them. at present. both they and their European customers.
The International Trade Department was contacted for comment, but did not respond.
Yesterday, when the impact of the exit from the single market and the customs union on January 1 became increasingly clear, the Financial times reported that the cost of a £ 12 bottle of wine in UK stores could rise to as much as £ 1.50 per bottle due to additional red tape and charges affecting imports.
In a further blow to the government’s idea of a “global Britain” after Brexit, the chances of signing a speedy trade deal between the UK and the US also appeared to be waning after President Joe Biden’s nominee for Treasury Secretary Janet Yellen made it clear that the president had other domestic economic priorities more urgent than international trade agreements.
Rachel Reeves, Shadow Chancellor of the Duchy of Lancaster and Shadow Minister of the Cabinet Office, said: “Once again we see the utter incompetence and lack of planning of this government holding back British business and holding back our Economic recovery.
“They have to control this now and stop leaving our businesses in the cold.”
