Customs duties on goods entering Great Britain from the EU cost UK businesses £4.5 billion in duties in the year to 31 January 2022 – up 64% on the previous 12 months, according to new data.
According to the new data from accountancy firm UHY Hacker Young, and published by City AM and The Independent, the rise in duties paid last year is nearly double the £2.9 billion paid in year-ending 31 January 2021.
UHY Hacker Young believes this increase relates to rules of origin and GB firms’ lack of awareness that to avail of tariff free trade under the EU:UK Trade and Co-operation Agreement (TCA), proof of origin needs to be provided.
Origin rules determine the economic nationality of your goods and are included in trade deals such as the EU:UK Trade and Co-operation Agreement (TCA) to determine whether goods can avail of preferential rates of duty.
The UHY Hacker Young report also shows that the last five months of 2021 were the costliest on record – with £2.1bn paid in that period alone.
Delayed filing
The accountancy speculates this leap was due to companies importing goods in 2021 having been able to defer customs requirements for 175 days.
According to Michelle Dale, senior manager at UHY Hacker Young: “Over the past year custom duties have been a hugely significant additional cost for many businesses. For a lot of them, custom duties have taken a big bite out of their profitability.”
In September 2021, the IOE&IT Daily Update reported HMRC figures showing that in the first half of last year, British traders paid additional £600m in duties, thought to be due to complex rules of origin requirements in the UK’s trade agreement with the EU – a deal which nominally removed tariffs for all goods.
The IOE&IT runs a monthly one-day course on how to navigate the complexity of rules of origin - see here for more information