Scotch boss warns of Brexit customs chaos
A LEADING distiller has raised the prospect of Scotch whisky being stockpiled at borders across the European Union (EU) after Brexit, amid concern new customs arrangements will struggle to cope after the UK exits the economic and trading bloc.
The concern stems from the introduction by HM Revenue & Customs (HMRC) of a new system for collecting duties and taxes for goods entering and leaving the UK, due to come in before the official Brexit date of March 29, 2019.
The new Customs Declaration System (CDS) will replace the existing CHIEF (Customs Handling of Import and Export Freight) regime, and is due to come into effect next January.
Martin Leonard, managing director of Airdrie-based Inver House Distillers, fears the new system will be ill-equipped to deal with the huge increase in workload the UK’s exit from the EU is expected to bring. This is because the CDS system was designed on the basis the UK would remain part of the EU, which changed following the Brexit vote of June 2016.
Mr Leonard said: “It’s critical that [CDS] has the capacity to deal with the increased level of exports, because it would have been designed on the basis of the UK being part of the EU.
“It is now going to deal with five times the number of transactions it did previously.”
Mr Leonard added: “From a company perspective, and also from a trade association perspective, we need to know that system will support trade, and also that there is a contingency plan in the event the timing doesn’t work out to be quite as planned.
“There has to be a fall-back position, because the worst-case scenario is we have goods stopped at ports. If that happens for any length of time, it is not too melodramatic time to say it will have an impact at stock bottling halls.”
The shift by HMRC to a new customs system is not the limit of Mr Leonard’s concerns around the implications of Brexit.
On the one hand, he highlighted it is positive whisky imports into the EU will not be subject to import tariffs in the event trading arrangements between the bloc and the UK revert to World Trade Organisation (WTO) rules after Brexit. The Scotch Whisky Association stated in the aftermath of the Brexit vote there is a zero per cent tariff under current EU-WTO rules that will not change.
But Mr Leonard said the introduction of customs barriers between the UK and nations around the EU is a worry. As a member of the EU, the UK can currently trade freely across the bloc, which is the single biggest export for Scotch whisky. Whisky exports to the EU were worth £1.24 billion in 2016, up 3.6 per cent on the year before.
Mr Leonard, whose firm makes the Old Pulteney and Speyburn malts, said: “We will now move to a situation where, our working assumption is, we will have a customs barrier to cross. While we can do that, and we obviously do that for other markets… the concern is we end up with disruption to trade.”