NO TRADE DEAL COULD MEAN £6 BILLION IN EXTRA EXPORTING COSTS
Leaving the EU without a trade deal in place could leave exporters with £6 billion a year of extra costs, according to analysis by the Guardian.
The analysis is based on a scenario where the UK leaves the EU and falls back on World Trade Organisation (WTO) rules ahead of a new free trade agreement.
According to international trade figures, $204 billion worth of British goods exported to Europe each year could face up to $7.6 billion in new tariffs under current rules.
However exporters remain optimistic ahead of Article 50 with businesses in both manufacturing and services confident in improving turnover over the next 12 months.
According to British Chambers of Commerce (BCC) in partnership with DHL, trade documentation fell by 1.42% in Q4 2016. The index now stands at 119.5, up 4.81% on Q4 2015.
Dr Adam Marshall, director general at BCC, said:
“The chancellor’s Budget must focus on cutting the up-front costs that government imposes on every business, and promote investment and exports.”
NET MIGRATION FALLS
The UK’s net migration fell by 49,000 to 273,000 3 months after the EU referendum result, according to Office for National Statistics.
Figures show that immigration fell by 23,000 to 596,000 in the 12 months to September while emigration rose by 26,000 to 323,0000.
Carolyn Fairbairn, director general at the Confederation of British Industry, said:
“The vast majority of people come to the UK to work, which benefits our economy. Any new immigration model must ensure those benefits continue, but that they are felt more evenly across the country.
“A new industrial strategy that delivers for people in all regions and nations of the UK, coupled with reform of public services, will help achieve this.”
VAT Flat Rate changes could see higher costs for firms
Proposed changes to the VAT flat rate scheme and the increased combating of abuse of the scheme could negatively impact compliant smaller businesses, according to the Chartered Institute of Taxation (CIOT).
Changes to the scheme were announced in Autumn Statement 2016 for ‘limited cost traders’ – businesses which have a very low cost base.
From 1 April 2017, firms using the scheme during the accounting period will need to pay an increase rate of 16.5%.
The changes are being brought in to tackle what HMRC believes to be widespread abuse of the scheme.
CIOT believes that more than 4,000 businesses could move back into standard VAT accounting to avoid this new rate, resulting in higher costs in the long term.
Under the scheme:
- you pay a fixed percentage of your VAT inclusive turnover to HMRC
- you keep the difference between what you charge your customers and pay to HMRC
- you can’t reclaim VAT on your purchases, excluding certain capital assets over £2,000.
Peter Dylewski, chairman of the CIOT’s indirect taxes sub-committee, said:
“HMRC will face difficulties building in effective anti-tax avoidance measures, to prevent traders side-stepping the new measure, for instance by buying and selling small amounts of goods to take them over the limited cost trader thresholds.
”One of the main challenges will be for businesses to understand whether they have acquired goods or services, which is often unclear for expenses such as computer software, electricity and gas and professional subscriptions.”