The government is advising firms to set up in the European Union to avoid border disruption, it has emerged.
Exporters have been told by the Department for International Trade to form EU-based companies to circumvent extra charges, paperwork and taxes resulting from Brexit.
The advice was revealed by the Observer over the weekend and follows trading problems experienced by the Scottish fishing and seafood industry - which led to protests in London last week. The Prime Minister dismissed the issues as "teething problems". Now it is being reported that the issues have also been piling up for small businesses since January 1 when the UK left the transition period with the EU, which had been set up to allow a smooth route to the new trading relations.
As a result of the disruption they have been told by advisers working for the Department for International Trade (DIT) that the best way to circumvent border issues and VAT problems that is to register new firms within the EU single market, from where they can distribute their goods far more freely. The heads of two UK businesses that have been beset by Brexit-related problems told the Observer that, following the advice they have already decided to register new companies in the EU in the next few weeks, and they knew of many others in similar positions.
Other companies have also said they too were advised by government officials to register operations in the EU but had not yet made decisions.
Asked on BBC Radio Scotland this morning that the Brexit "debacle" was continuing, Scotland Office minister Iain Stewart said: "No, there are a few short term issues as we've seen with fishing and seafood as we've seen over the last few weeks, those are being resolved and whenever there's a change in arrangements, there's always a little short term disruption, but these are being worked through very successfully."
"We always knew there were going to be problems but... never did we foresee what we've got in front of us just now."
Andrew Moss, who runs Horizon Retail Marketing Solutions, based in Ely, Cambridgeshire, which sells packaging and point-of-sale marketing displays in the UK and to EU customers, is registering a European company Horizon Europe in the Netherlands in the next few weeks, on the advice of a senior government adviser. The move would mean laying off a small number of staff here and taking on people in the Netherlands.
Referring to discussions with a senior DIT adviser on trade, Moss told the Observer: “This guy talked complete sense. What I said to him was, have I got another choice [other than to set up a company abroad]? He confirmed that he couldn’t see another way.
"He told me that what I was thinking of doing was the right thing, that he could see no other option. He did not see this as a teething problem. He said he had to be careful what he said, but he was very clear.” By moving operations into the EU and shipping out large consignments from the UK to their new European operations, the businesses can not only avoid cross-border delays and costs on every single small consignment they send, but can also avoid VAT problems.
A spokesperson from the Department for International Trade said: “This is not government policy, the Cabinet Office have issued clear guidance, available at gov.uk/transition, and we encourage all businesses to follow that guidance. We are ensuring all officials are properly conveying this information.”
Scottish fishermen and seafood exporters rallied in central London last Monday, parking slogan-bearing lorries near Westminster in protest at post-Brexit rules they say are threatening the industry's future. The protesters descended on London after facing weeks of chronic delays to shipments of fresh and live produce, prompted by Britain's departure this month from the European Union single market and customs union.
Requirements for exporters to complete reams of new paperwork when sending seafood to Europe have rattled a sector that relies on rapid delivery schedules.
"What they're asking us to do... just isn't possible with live shellfish," Allan Miller, who runs one such business in Scotland, told AFP, adding the process needed to be "streamlined". He noted the "mountains of paperwork" -- from customs declarations to health certificates -- and "astronomical" related costs were crippling his and other operations.
"We always knew there was going to be problems but... never did we foresee what we've got in front of us just now," Miller said.
Johnson reiterated at the time that the situation they describe is due to "teething problems" exacerbated by the coronavirus pandemic.