Move to EU to avoid Brexit costs, firms told

Exporters advised by Department for International Trade officials to form EU-based companies to circumvent border issues

British businesses that export to the continent are being encouraged by government trade advisers to set up separate companies inside the EU in order to get around extra charges, paperwork and taxes resulting from Brexit, the Observer can reveal.

In an extraordinary twist to the Brexit saga, UK small businesses are being told by advisers working for the Department for International Trade (DIT) that the best way to circumvent border issues and VAT problems that have been piling up since 1 January 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 have told the Observer that, following advice from experts at the Department for International Trade, 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.

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.

This will 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 said: “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.”

Moss said it was now clear that Brexit was not about winning back control from the EU but investing in it to survive.

Geoffrey Betts, managing director of Stewart Superior Ltd, a company in Marlow, Bucks, which sells office supplies to UK and continental customers, said he had also decided to set up a company in the Netherlands for the same reasons.

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