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 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
#StopBrexit
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