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City is in denial about post-Brexit trading: MHA MacIntyre Hudson

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French securities regulator the AMF has told the EU that it should fix its derivatives trading rules to avoid damage to its own financial sector once the UK finally leaves the bloc on 1 January.

With less than two months until the Brexit deadline, Alison Horner, indirect tax partner at MHA MacIntyre Hudson, believes trading with Europe after Brexit, deal or no deal, will be more challenging than many businesses are currently realise or even willing to admit.

“Due to Covid-19 the majority of British companies involved in exporting to Europe have not been able to give Brexit the attention they should and unfortunately some are in denial about the scale of the challenge,” Horner told City PM

“While there are a number of solutions available to facilitate EU trade, it is not as simple as getting an EU EORI number to solve all supply chain challenges,” she added.

An EORI number, or Economic Operators Registration and Identification number, is needed to move goods between the UK and non-EU countries.

New arrangements and regulatory issues

The problems Brexit will throw up are “surmountable” but they also require a long-term strategy to adjust to new trading arrangements and regulatory issues, Horner continued.

The lack of preparedness is very understandable given the pandemic but Horner urges businesses act promptly and get in the right mindset to see Brexit through over the next five to ten years.

“It is crucial to realise that although a deal will bring great relief to businesses and their bottom line by removing the cost of duty tariffs, the legal and regulatory as well as administrative costs will remain,” she noted.

Horner singled out customs declarations as they will cost any company money, irrespective of any actual duty being charged. As an estimate, if a company has 2,000 declarations to make it could cost potentially £50,000 to employ an agent to handle this volume of paperwork.

“Due to Covid-19 and the misconception that a deal means trading will continue as normal we have sleepwalked into a situation where, less than two months away from the biggest change to the UK’s trading relationships in our lifetimes, many businesses are unprepared,” Horner concluded.