One in five UK small businesses have halted EU exports, accountants say

LONDON (Reuters) - About a fifth of small and medium-sized British businesses that export to the European Union have temporarily halted overseas sales due to the complexity of new customs rules, a firm of accountants said on Tuesday.

Since the end of a post-Brexit transition period on Dec. 31, British businesses selling goods to customers in the EU have had to fill out customs declarations and other paperwork, and there have been delays to freight services.

UHY Hacker Young said that out of just over 100 clients, more than 20% had temporarily stopped selling goods to Europe.

"These extra costs and paperwork could be devastating for UK SMEs who rely on their EU customer base. EU customers will inevitably look elsewhere if it means they can avoid paying import costs," said Michelle Dale, a senior manager at UHY Hacker Young.

While British goods being sold in the EU do not face tariffs or quotas, there are extra administrative costs from form-filling and other checks - so-called 'non-tariff barriers'.

The accountancy firm said a particular challenge came from "rule of origin" requirements that limit the number of foreign components that can be included in goods assembled in Britain for sale elsewhere in Europe.

In November, the Bank of England estimated that Britain's economy would suffer short-term damage equivalent to 1% of output or 5 billion pounds ($6.8 billion) in the first three months of 2021 due to disruption from the new border rules.

Government budget forecasters pencilled in a 4% annual cost over the longer term, or roughly 87 billion pounds a year.

($1 = 0.7342 pounds)

(Reporting by David Milliken; editing by Michael Holden)