Brexit: Despite risk of trade ‘no-deal’, optimism remains

With trade talks still at near-deadlock after last week’s meeting between the negotiators of European Union and Britain, Ireland’s Taoiseach (Prime Minister) said he was confident a “landing zone” could be found for a trade deal by the end of year following his talks with the UK Prime Minister. After his first meeting with Boris Johnson since taking over the leadership of the Irish government in June, Michael Martin claimed his “gut instinct” was an agreement could be struck.

Johnson vowed any trade deal would not result in a border down the Irish sea, declaring it would not happen “over my dead body” as he insisted Northern Ireland business would have unfettered access to UK markets. Johnson took the opportunity to meet the premier of Ireland (which is in the EU, with Northern Ireland being a part of the UK), after a new government was formed in Dublin during the height of the pandemic.

Martin said he was confident a Brexit trade deal would be found as both sides were eager to avoid another economic hit following the pandemic. “Where there’s a will, there’s a way,” he said. “My own gut instinct is we both understand we don’t need another shock to the economic system a no-deal Brexit would give or a sub-optimal trade agreement would give alongside the enormous shock that Covid has already given.” The two leaders said they discussed creating new structures within which to conduct UK-Ireland relations.

The UK government’s Border Operating Model (BOM) will lead to thousands of UK businesses being blocked from exporting to Europe from January 1 next year, according to a leading tax and advisory expert. Simon Sutcliffe, a partner at Blick Rothenberg (a tax, accounting and business advisory firm), claims the customs regime put in place for the end of the Brexit transition by the government and Her Majesty’s Revenue and Customs (HMRC) will exclude “huge numbers” of business owners because they will be “faced with full customs formalities from day one”.

This is despite an insistence from the government that a six-month relaxation of the administration around imports and exports will allow UK firms to ease their way into a new relationship with buyers from nations that remain in the European Union. Sutcliffe said: “The BOM launched by HMRC is not what it seems and is contradictory, and thousands and companies who thought they could use it will not be able to. The whole plan is a muddle.”

As of January 1, 2021, HMRC states that businesses can record the details of importation in their own books and records and then six months later submit a full customs declaration and pay any duty. But Sutcliffe claims this will “brush over” the fact that to do this, businesses must be pre-authorised or be in the process of applying before the full customs entry falls due. “These simplified declaration procedures rightly require a stringent and demanding level of pre-authorisation by HMRC to use them and a high bar of compliance is maintained,” said Sutcliffe.

He added: “This is to prevent fraud and the loss of swathes of revenue that result from the time lag of the goods entering the UK to when the follow-up supplementary entry is made – at the moment the delay under CFSP (the Common Foreign and Security Policy) is only a few days. The aim is to increase that delay for up to six months but accessing this deferment period is not proving straightforward for business to understand or prepare for.” A spokesman for HMRC said: “We are streamlining the procedures to make the process quicker and easier for traders and intermediaries.”

(The writer is our foreign correspondent based in the UK. He can be reached at andyjalil@aol.com)