Fashion retailer Next could pay an extra £20 million in duty after the UK leaves the European Union, the company has calculated. However, it says that the biggest risk to its business is from delays at the ports.
In its half year report, it give a detailed calculation of the risks to the business from Brexit. It said that the value of stock delivered at cost totalled £1.74 billion on which the current duty was £65 million.
Some £230 million worth of the total stock delivered would be affected by Brexit result in a maximum potential addition duty of £20 million.
On the risk of port delays, the company said: “It is not yet clear how well prepared HMRC systems, customs and other relevant personnel will be for the upcoming potential increase in workload and data capture.
“We believe that this indirect risk of interruption to the smooth operation of our ports represents the biggest risk to our business from Brexit. The more information that can be provided by the Government on how they plan to manage and mitigate the increased workload would be helpful.
In our own sector there is no reason why goods should not flow with relatively little friction through customs from the EU, in the same way they currently come into the country from non-EU countries. The issue will be the preparedness of the UK authorities and UK businesses.”
There are a number of other risks that it has analysed. It estimates that it will be required to make additional payments for customs clearance charges totally some £100,000.
Next currently sells £190 million of goods into other EU countries. It has set up companies in Germany and Eire to minimise additional duty.
It has also taken steps to minimise the impact of potential loss of GSP relief on EU imports which could increase the selling price of its goods in the EU by two per cent.
In summary, it said: “Departure from the EU without a free trade arrangement and managed transition period is not our preferred outcome. However, NEXT is well prepared for this eventuality and we have all the administrative, legal and IT framework in place to ensure that we are able to carry on running the business as we do now.
“In conclusion, as long as ports and customs procedures are well prepared for the change, and tariff rates are adjusted to ensure no net increase in duty costs to consumers, we believe we can manage the business to ensure no material cost increases or serious operational impediments.”