HMRC criticised by MPs for lack of ‘no deal’ planning for small businesses

Written by Oliver Wade
05/10/2018

HM Revenue & Customs (HMRC) has been criticised by MPs for failing to advise 100,000 small businesses on how to prepare for a no-deal Brexit, after the revenue’s chief executive Jon Thompson received a letter from parliament’s Public Accounts Committee yesterday.

Committee chair and Labour MP Meg Hillier stated she was “concerned and disappointed” about the lack of communication with small businesses, and asked for an urgent update on how HMRC plans to make them aware of potential changes to how they trade.

Furthermore, Hillier criticised a further delay to a new customs declaration service, which more than likely will not function properly until after Brexit. Concerns were first raised in July over the revenue’s lack of communication with small businesses, with Hillier highlighting to HMRC that it has “made little progress”.

“You gave us no assurance that HMRC has a plan to ensure that businesses are aware of what they will need to do,” the MP added.

"We are particularly concerned about the 100,000 small traders that HMRC can not engage directly with, as you do not know who they are.

"I would be grateful if you could write to the Committee as soon as possible with an update on the level of business understanding and preparedness for changes to customs rules and procedures in the event of no deal."

Hillier then continued to accuse HMRC of being underprepared for changes to how businesses would pay VAT on EU imported goods after Brexit.

However, the revenue has proposed a system of postponed accounting, allowing businesses to still pay their tax bills in the current time frame.

Hillier said: “The potential move to postponed accounting is something that was foreseeable and it is reasonable to expect you to have been better prepared for it."

A HMRC spokesperson commented: “HMRC has well-developed plans to ensure that there will be a functioning customs, VAT and excise system in the unlikely event of a no deal. We have engaged with business representative bodies who will be a key partners in reaching businesses to ensure that they understand any implications for them.

“We have always said the timeline for implementing the Customs Declaration Service is tight, but that we would operate the current system (CHIEF) in tandem throughout the transition. We have made good progress to ensure that the UK has a customs system capable of handling any potential volume of customs declarations after March 2019.”

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