British businesses struggling to export to the continent are being encouraged by government trade advisers to set up separate companies inside the European Union to get around extra Brexit charges, paperwork and taxes.
UK small businesses are reportedly being instructed by officials working for the Department for International Trade (DIT) that the easiest way to circumvent mounting border issues and VAT problems is to register new firms within the EU single market, which Britain left on 1 January.
The heads of two businesses left in disarray by Brexit told the Observer that they were following DIT’s advice, and had already decided to register new companies in the EU in the coming weeks. Many others reported receiving the same advice.
Andrew Moss, head of Horizon Retail Marketing Solutions – based in Ely, Cambridgeshire – is registering a European company in the Netherlands in the coming weeks on the advice of a senior government adviser.
That means his firm – which sells packaging and marketing displays to customers in the UK and EU – will begin laying off staff in the UK, and taking on people in the Netherlands.
Referring to his discussions with a DIT official, Moss said: “This guy talked complete sense. What I said to him was, have I got another choice [other than to set up a company abroad]? He confirmed that he couldn’t see another way.
“He told me that what I was thinking of doing was the right thing, that he could see no other option. He did not see this as a teething problem. He said he had to be careful what he said, but he was very clear.”
Another businessman has decided to follow suit, setting up a new company in the Netherlands for the same reasons.
Geoffrey Betts, managing director of Stewart Superior Ltd, a Marlow office supplies firm, said: “When the government said it had secured free trade, it was obvious it was nothing of the sort.”
New charges on moving goods, VAT problems and more bureaucracy had created an “administrative nightmare”, he added.
Relocating operations into the EU will mean British companies can avoid cross-border delays and costs on every consignment they send – and avoid VAT problems plaguing post-Brexit trade.
‘Totally avoidable increase in cost’
With the impact of leaving the single market becoming increasingly clear, it emerged on Saturday that British boozers could end up paying up to £1.50 extra per bottle on many European wines while choosing from a reduced range because of post-Brexit paperwork.
Importers said the cost of new customs declarations combined with higher haulage prices would hit UK drinks in the pocket – while flat-rate costs per shipment would push wholesalers to offer a narrower variety of wine.
“We are looking at a totally avoidable increase in the cost of wine across the board,” Jason Millar, a director at wholesaler Theatre of Wine, told the Financial Times. “Many importers will cut wines, not because they don’t believe in them . . . but because they don’t feel they are able to muster enough volume.”
Daniel Lambert, a wine wholesaler who imports two million bottles a year, said he believed Brexit bureaucracy would add up to £1.50 to the price of a £12 bottle of wine.
Meanwhile a cheesemaker in Cheshire has been left with a £250,000 Brexit-shaped hole in his business after the UK formally severed ties with Brussels.
Simon Spurrell revealed that he has lost 20 per cent of his sales overnight, after discovering that he would have to prove a £180 health certificate on retail orders to EU consumers – including those buying £30 personal gift packs of his award-winning wax-wrapped cheese.