A little thread here about potential problems for SME's in a No Deal scenario.

We import some components from the Far East and receive these 5 to 10 times every year. We have to pay import duties and VAT when they arrive, which can cause serious cash flow problems /1
We pay our domestic VAT quarterly in arrears. It also means we have to be able to pay this immediately as soon as the ship docks, otherwise the shipping agent will not release the goods and will charge storage charges. /2
The shipping agent can defer the payment of the upfront VAT, but we are still asked to pay it to the agent upfront, so that doesn't help. We can ask to get a deferment account, a DAN, with HMRC which means the VAT will be paid quarterly, with domestic VAT, so we did that. /3
Unfortunately, VAT and Duties are treated the differently by HMRC, we so got a DAN for VAT, but not for Duties. This results in endless confusion with the shipping agents, when asked to use their DAN for Duties only (the much smaller amount) but our DAN for VAT. /4
So we asked HMRC for a deferment account for duties as well. That request was approved, but, although the VAT deferment account was approved in a trice, for the much smaller Duty account we are asked to provide a guarantee?? /5
The bank can provide such a guarantee, but charges a silly amount of money for this. As a Ltd the Directors should not have to provide guarantees for this personally, so we're stuck. /6
We're a small company, so we don't have the expertise or resource to deal with all those technicalities - it is a major distraction from the day to day running of the business. Then we found another problem: /7
If you don't use you DAN for a while HMRC freezes it, but they don't inform you, so when the ship hits the dock and you ask the shipping agent to use your DAN to defer VAT, it bounces and you have to find the upfront cash straight away. If not, you incur storage costs again. /8
All this will be magnified to many thousands of SME's in case of a No Deal #Brexit who get some goods from the EU. Companies smaller than ours, who really don;t know how to handle that and can fold very quickly. A very real problem! /End


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More from @Evanderstap

Aug 9, 2018
@redalphababe @DeborahMeaden An excellent blog. The cord it struck with me is the moment that you say that Leave voters - yes you, put our businesses at risk. That makes it personal, like the guy in my factory who voted Leave and who put my business at risk. He didn't think about that at the time. /1
@redalphababe @DeborahMeaden He thought his life was shit. Not enough money to pay the bills, benefits cut, long waiting times at the doctors, and no matter how he voted it was always the same. Someone told him it was the EU immigrants that caused his miserable life, so he voted Leave /2
@redalphababe @DeborahMeaden He thought it was worth a try. He didn't know much about the EU, nor did he care much about it, but the talk about British fishermen catching more of our own fish made sense and not paying the EU would give us more for the NHS, surely? /3
Read 8 tweets
Jul 28, 2018
@h8kes @FeddieDog @bernardjenkin @LynnMcD61564763 Oh really? Last week a container from China arrived. It was randomly selected for a check, causing a days delay in clearance. Due to an error (unsure who by) the duty deferment account was blocked.
@h8kes @FeddieDog @bernardjenkin @LynnMcD61564763 The shipping agent offered to defer VAT and duties on their account, but needed payment for this upfront. As this amount was not readily available this caused a further delay of 3 days.
@h8kes @FeddieDog @bernardjenkin @LynnMcD61564763 The goods were purchased for a time critical project, which could not be fulfilled. Due to the perishable nature of the goods the value dropped by over 50% and with contact penalties had a negative value.
Read 4 tweets
Jun 5, 2018
I run a small manufacturing company dealing predominantly with UK customers. Most of our components are imported, either directly by us or by stockholders in the UK.
Following the referendum our cost prices have gone up significantly due to the fall in the Β£ and it is hard to put that through to the market unfortunately, so we've lost margin as a result.
We started to export recently, first to the EU and more recently to the US. Our products are bulky and delivery costs and transit damages are a real challenge. But exporting to the EU is ever so easy apart from that.
Read 12 tweets
Mar 3, 2018
Friends of ours voted Leave because they feel it would be good for this country if we could negotiate our own trade deals, so I want to spend a few thoughts on that here. 1/17
If you believe that we can negotiate great deals outside the EU ask yourself how we would achieve that.
It is not because we have better negotiators that the EU. The negotiators of the EU are the best of all countries, including the UK. 2/17
It is not that the EU is not targeting countries that we would. It is clear to everyone that the global market changes constantly and the EU, like Britain, identifies emerging economies to negotiate with. 3/17
Read 20 tweets

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