The timber tax bomb will explode if EU imports cease being VAT free.
“Some 90% of timber used in construction is imported from Europe, which British timber supplies are insufficient to replace,” said TTF managing director David Hopkins. “Under the proposed Taxation Bill, once the UK leaves the EU and its VAT area, VAT on EU imports will have to be paid up-front. This will cause considerable problems for the SMEs who make up the majority of our sector.”
Additional problems, not just for the timber sector but for construction supply chains in general, include potential delays, and greater costs for storing timber at ports and in administering customs checks and documentation, the federation says.
“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,” said Mr Hopkins.
The Timber Trade Federation is pressing 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 on the building industry. “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,” Mr Hopkins added.
Timber prices in the construction supply chain to small builders have already risen by 8% 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.