The UK timber industry faces a potential “Billion Pound Brexit Bill” if Britain leaves the EU Customs Union causing considerable problems for SMEs which makes up a majority of the sector.
“Once the UK leaves the EU and its VAT area, VAT on EU imports will have to be paid up-front,” said Timber Trade Federation Managing Director David Hopkins. “Some 90 per cent of timber used in construction is imported from Europe, which British timber supplies are insufficient to replace.”
The TTF released a statement on Friday—what it calls ‘The Timber Tax Bombshell’—to highlight the potential delays, and greater costs for storing timber at ports and in administering customs checks and documentation.
The problems funnel down through the supply chain, including construction.
“Builders’ merchants, and their builder customers, responsible for fulfilling government housing targets, rely on Just-In-Time deliveries of timber to premises and sites. Currently timber entering the UK from the EU clears ports immediately with no need for customs checks,” Hopkins stressed. “Over 60 per cent of the timber used in the UK comes from Europe.”
The Federation is asking Government to ensure timber imports are able to clear customers in the same manner as present, with no delays or up-front costs likely to penalise SMEs, or to impact Britain’s housing supply chains.
“The Government must also preserve the existing VAT payments system for imports from the EU, or put in place a new system which maintains the same benefits,” Hopkins added.
The timber sector currently employs around 200,000 people across the UK in manufacturing, distribution and construction. Every Parliamentary constituency benefits from jobs stemming from or connected to the timber industry.
Timber prices in the construction supply chain to small builders have already risen by eight per cent in the last 12 months, according to the Federation of Master Builders. The TTF reports this is due mainly to the currency depreciation since the Brexit vote, and competitive global markets for construction timber pressurising supplies into the UK.