1) Following the failure of any Kent MPs to support business friendly amendments for the Taxation (Cross Border Bill) over the past 2 days we feel the need to explain why VAT is such an important issue for small business.
2) To begin, you have to understand that the #SingleMarket is only a Single Market for countries who are members of it. Businesses from 3rd countries not only have to deal with the taxman in each country they do business with, but also in each country their goods flow through.
3) At present, a UK company selling goods to Germany or providing parts in a supply chain will usually truck these goods via the @Port_of_Dover and land them in Calais. Within the #SingleMarket this is easy as they just pass through France without involvement of the French taxman
4) A company outside the #SingleMarket has to deal with the taxman in each country these goods pass through. That means paying 20% VAT upon arrival in Calais and although the truck will only be in France for a few hours, there is a 3 to 6 months wait for a rebate after it leaves.
5) This is a major problem for the cashfow of small business. If they ship just one container worth £25k, they have to give the French taxman £5k and wait about 20 weeks to get it back. But they do this at least once a week, paying another £5k for each container...
6) This creates a never-ending interest-free credit line of at least £100k from the business to the French taxman. It really hurts small business as it destroys their cashflow and damages their profits as they have to pay interest on the money they borrow to finance this.
7) What isn't mentioned yet is that this a) happens in addition to any import tax, b) that it happens in each country the truck passes through, as well as c) the destination. A standard free trade agreement only removes the import tax and thus does not resolve this.
8) large companies have less of a problem with this as they can get better credit and form EU subsidiaries to get around this. We are already seeing some larger Kent SMEs do this in a wide range of sectors, and now the amendments have failed we expect more.
10) We appreciate that this is an issue not well understood by politicians or the media, and our last hope now is that the Lords will do their best to block the passing of the Taxation (Cross border) Bill.
#NoDealBrexit creates red tape and only benefits a few large companies.
#NoDealBrexit creates red tape and only benefits a few large companies.
