A recent survey by the British Chambers of Commerce (BCC) reveals a concerning lack of preparedness among UK small and medium-sized enterprises (SMEs) for ongoing EU regulations and tax changes.
A staggering 80 per cent of SMEs surveyed are unaware of the reporting requirements for the EU’s newest Green Tax, which took effect on 1 October 2023. The initial phase covers the collection of data to be reported, with the first submissions due by January 2024.
Known as the carbon border adjustment mechanism (CBAM), this tax requires companies to report on carbon emissions related to certain imported goods, such as steel, aluminium, and fertilisers.
From 2026, businesses importing goods will need to purchase and surrender a number of CBAM certificates to offset the pollution embedded in the corresponding imported CBAM products.
A registry has been made available to assist with the necessary calculations.
The importance of product quality marks
The survey also found that 43 per cent of UK manufacturers are unaware of the UK’s development of an alternative product quality mark to replace the EU’s – the UKCA mark.
This lack of awareness could lead to additional bureaucratic hurdles for UK exporters.
However, the UK Government has confirmed that it intends to introduce legislation to extend recognition of goods that meet EU requirements, including the CE marking, indefinitely, beyond 31 December 2024 for many products.
Given these impending changes, businesses must review their EU import footprint and assess the compliance and organisational impact on their trade.
The divergence in regulations and taxes between the UK and the EU post-Brexit undoubtedly creates additional complexities for UK businesses looking to trade with the Continent.
Therefore, it’s imperative to stay informed and prepare for changes in advance to mitigate their impact on your operations.
Government’s role in supporting businesses
The Department for Business and Trade has stated that it is working on tailoring regulations to benefit UK businesses post-Brexit.
However, businesses need to take proactive steps to understand and adapt to these new regulatory landscapes.
This includes discussing potential import/export/overseas trading issues with your accountant who can help you develop a firm strategy going forward.
How can George Hay help?
When importing and exporting goods, businesses will need to ensure they are prepared to comply with legislative changes and that they understand the tax implications of any new rules.
We have a team of expert tax and business advisers, who can support you now and beyond the transition period to ensure you can continue to run your operation in a tax-efficient and compliant manner.
To talk to us about the impact of Brexit on your business, or about how these latest changes will impact your operations, please contact us.