Threats to the UK food industry

HMRC’s Border Target Operating Model (BTOM) published last year confirmed that an inspection charge will be payable on consignments subject to Sanitary and Phytosanitary (SPS) checks. The inspection charge, also referred to as the ‘common user charge’, applies to goods that enter the UK through the Port of Dover or the Eurotunnel, and will be levied in order to recover costs incurred in undertaking physical inspections. The Department for Environment, Food and Rural Affairs (DEFRA) has recently confirmed that these charges will apply from 30 April 2024, leaving businesses little time to prepare and implement appropriate measures.

Specifically, the charges will apply to imports of animal products, plants and plant products and DEFRA has confirmed the rates that will be charged for each commodity line in a Common Health Entry Document (CHED). We have provided an overview below of the rates, per commodity line, that will apply in respect of imports.

• Low risk Products of Animal Origin (POAO): £10
• Medium-risk POAO: £29
• High-risk POAO: £29
• Low-risk plant and plant products: no common user charge
• Medium-risk plant and plant products: £29
• High-risk plant and plant products: £29

Please note that we have listed the rates that will apply for imports of the goods above, however, the rates will vary if these goods are moved under transit. For information regarding these rates, please refer to HMRC’s guidance.

Notably, the maximum charge for a single CHED will be limited to five commodity lines i.e. medium and high-risk CHEDs will be capped at £145 and low-risk CHEDs will be capped at £50. The charge will also be capped at £145 for mixed consignments, but we recognise the profound impact this will have on many businesses who import mixed loads.

With the charges due to take effect later this month, businesses have little time to consider the impact on procurement, payment of additional border costs and commercial pricing decisions. This will be particularly damaging for UK importers who are locked into contracts with retailers in the UK, unless they have scope to pass on some or all of the additional costs. We recognise that UK importers will be tasked with the challenge of negotiating contracts with EU suppliers, in an effort to remain competitive in the UK market. It is reasonable to expect a spike in UK food consumer prices on the premise that not all EU suppliers will be co-operative in renegotiating contracts to account for these additional costs. This will have a large impact on the profitability of UK businesses and a preference for domestic goods which are likely to be more cost-efficient to consumers. However, there may be restrictions in food choices as UK businesses may show an unwillingness to import certain goods in light of the forthcoming changes.

We recognise that this is yet another inevitable cost of Brexit, and appears to place further restrictions and challenges on trading with the EU. The government has previously stated that the charges would contribute to the creation of ‘world-class border facilities’, but the effect of such policies only creates additional cost and disruptions to supply chains between the UK and EU.

To discuss this further, please contact Ian Worth, or your usual Crowe contact.