Next Brexit impact…

Online and off-line fashion retailer Next could end up paying an extra £20 million in duty after the UK leaves the European Union. It says however the biggest risk to its business will be from delays at ports.

According to the Next half-year report, which gave a detailed calculation of Brexit risks to its business, the value of stock delivered to it at cost totals £1.74 billion on which current duty is £65 million. Some £230 million worth of the total stock delivered will be affected by the departure from Europe, resulting in a potential duty addition 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 other risks assessed by Next. The company estimates it will be required to make additional payments for customs clearance charges of some £100,000.

The company currently sells £190 million of goods to other EU countries. To mitigate the cost impact it has set up companies in Germany and Ireland.

Next has taken steps to minimise the impact of potential loss of GSP relief on EU imports, that could increase selling price of its goods in the European Union by 2%.

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.”