Tax & admin · 5 October 2018

HMRC slammed for concealing Brexit reality from 100,000 small businesses

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HMRC “does not know” who Britain’s smallest traders are

HMRC has failed to inform 100,000 micro business owners how a no deal Brexit could change the way they trade, according to a committee of MPs. 

A letter from the parliamentary Public Accounts Committee to Jon Thompson, HMRC chief executive, detailed the tax office’s failure to effectively communicate with Britain’s smallest companies.

Meg Hillier, committee chair and Labour Party MP, wrote that she was “concerned and disappointed” at the level of communication between HMRC and the 100,000 small traders who HMRC “cannot engage directly with”.

“You have made little progress”, Hillier added, referencing initial concerns put to HMRC in July.

Concerns were also raised around the latest delay to HMRC’s new customs declarations service, which will replace the current system for declaring imports and exports from outside the EU.

“You gave us no assurance that HMRC has a plan to ensure that businesses are aware of what they will need to do.

“We are particularly concerned about the 100,000 small traders that HMRC can not engage directly with, as you do not know who they are.”

Hillier added: “I would be grateful if you could write to the Committee as soon as possible with an update on the level of business understanding and preparedness for changes to customs rules and procedures in the event of no deal.”

Read more HMRC content:

VAT after Brexit

Confusion around how small businesses will pay VAT on EU imported goods after Brexit – deal or no deal – was also criticised in the letter.

HMRC previously claimed a period of “postponed accounting” would prevent importers from paying VAT on goods earlier than they currently do. After Thompson told the committee HMRC had only recently begun to develop the necessary software, Hillier warned that time was running out to prepare the required infrastructure.

Responding to the committee, an HMRC spokesperson said: “HMRC has well-developed plans to ensure that there will be a functioning customs, VAT and excise system in the unlikely event of a no deal.

“We have engaged with business representative bodies who will be a key partner in reaching businesses to ensure that they understand any implications for them.

“We have always said the timeline for implementing the Customs Declaration Service is tight, but that we would operate the current system (CHIEF) in tandem throughout the transition. We have made good progress to ensure that the UK has a customs system capable of handling any potential volume of customs declarations after March 2019.”

Read more about the impact of Brexit on small UK businesses:

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VAT

 

HMRC publishes VAT guidance in the event of no-deal Brexit

HMRC has released guidelines to make business owners aware of both immediate and long-term changes if no trade agreement is struck with the EU.

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ABOUT THE EXPERT

Simon Caldwell is deputy editor at Business Advice. He has a BA in politics and communications from the University of Liverpool, and has previously worked as a content editor in local government and the ecommerce industry.

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