The Builders Merchants Federation (BMF) has warned about the impact paying VAT upfront on European materials will have on its members.
The VAT issue will affect builders merchants if the UK exits the EU without a mutually beneficial customs arrangement, the BMF said, effectively adding 20% on imports from the EU upfront before materials and products can leave EU ports. Last week, Parliament voted to ban the UK from raising taxes bound for the EU unless the EU also collects tax for the UK.
The BMF said it would burden merchants on top of rising world prices and currency fluctuations. The UK is heavily reliant on imports for materials such as timber, bricks and paint. 60% of timber used in UK building comes from the EU, largely Sweden, Finland and Latvia, with an added cost of £1 billion estimated by the Federation.