Businesses would be hit with an annual £15 billion bill for filling in customs forms for trade between the UK and the EU in the event of a no-deal Brexit, HM Revenue & Customs has warned.
An official government paper, released this week, has calculated the cost to business to complete all the paperwork for the 215 million consignments of goods crossing between the UK and the EU, assuming trade remained at 2017 levels.
It is estimated that large companies importing and exporting in high volumes would face a cost of £28 for filling in the forms for each load imported.
This would take an employee 1hr 45mins on average.
If the work was outsourced, HMRC estimates the cost would rise to £56 for each consignment, based on the average charges of freight forwarders.
That leaves the annual “static total ongoing administrative burden on UK-EU trade” at £15 billion- almost exactly what we paid to the EU for membership last year.
On the low side
According to The Financial Times, HMRC’s figures are likely to be on the low side as they did not include the additional costs of complying with new VAT procedures for services companies, which dominate the UK economy, or for new VAT rules that would apply to parcels following a no-deal Brexit.
They also exclude the one-off costs businesses would incur in preparing to fill in customs declarations.
The new estimates contrast with Boris Johnson’s claim at the Conservative Party conference last week that the UK could save £1 billion a month by leaving the EU on 31 October.
It also chimes with new reports that government debt could soar in the event of a no deal Brexit.
Debt levels last seen in the 1960s
New research by the Institute for Fiscal Studies (IFS) has found government debt would rocket to levels not seen since the 1960s if the UK crashed out of the single market without a deal.
Following last month’s spending review, Government borrowing was on course to top £50 billion next year, more than double what the Office for Budget Responsibility was forecasting as recently as March.
In its annual “green budget”, the IFS warned that in those circumstances, next year’s “mini boom” in public spending would be followed by another “bust” as ministers tried to get the public finances under control.
Analysis by Citi bank for the IFS calculated UK national income was already between £55 billion and £66 billion lower than it would have been if the country had voted Remain in the 2016 EU referendum.