Approximately 20% of UK SMEs have temporarily stopped exporting to the EU due to the uncertainty and information required to complete export declarations correctly, according to research from accountancy firm UHY Hacker Young.
The number of SMEs who have stopped exporting to the EU could rise even further over the next few weeks as they grow increasingly frustrated with the new rules.
Confusion over the new export rules means goods which were on route to the EU are being sent back to the seller in the UK due to incorrect or incomplete documentation.
A large number of shipments are also being returned to the UK by EU customers who are unwilling to pay the new customs clearance charges.
As part of the Brexit deal UK exports to the EU are subject to the ‘rule of origin’ clause which means that import duties are payable if a some or all of the product has originated from outside the EU, along with the VAT.
Many UK SMEs exporting to the EU have much of their supply chain based outside the EU, meaning they have been caught out by the ‘rule of origin’ clause.
Michelle Dale, senior manager at UHY Hacker Young’s Manchester office, said: “The number of SMEs who have no option but to halt exporting to the EU could continue to grow.
“These extra costs and paperwork could be devastating for UK SMEs who rely on their EU customer base. EU customers will inevitably look elsewhere if it means they can avoid paying import costs and UK businesses could see part of their client base evaporate.”