Hampshire businesses have been warned about the complexities of international VAT and Customs Duty rules.

VAT specialists at accountancy firm Azets have likened the rules to an iceberg, with many businesses unaware of the dangers lurking beneath the surface.

The warning comes amid increased scrutiny from HMRC, with Azets currently helping several clients resolve multi-million-pound issues related to the movement of goods across international borders.

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Mark Doherty, VAT partner at Azets in Winchester and Romsey. (Image: Azets) Common problems include overclaimed or underpaid VAT, unforeseen overseas VAT registrations and insufficient evidence to support zero-rating of export sales.

Winchester and Romsey-based Mark Doherty, Azets VAT partner, said: "UK businesses often don’t have the resource or technical skills to address these areas and as such, are being subjected to Tax Authority reviews or are vulnerable to goods being held up at borders, impacting supply chains financially and in terms of delivery times.”

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He added: "We are still seeing many businesses operating internationally who are unaware of the VAT and Customs rules that need to be adhered to when moving goods over international borders.

“Clearly, when goods are physically held up at Customs borders everyone on the operational side of the business views it as a major issue. However businesses can often proceed without knowing they have any problems at all, such as a VAT issue which can go under the radar and continue to build until a Tax or Customs Authority knocks on the door.

“It is very much like an iceberg where they may be able to see matters to address on the surface but under the surface there is a large and potentially dangerous mass which can cause untold damage.”

Brexit added significant complexity for those businesses that historically were used to frictionless trade with the EU.

As well as the potential for significant HMRC assessments and penalties for non-compliance – starting at 30 per cent – consequences also include cash flow issues, delays at borders, returned goods and commercial problems.

Mark said: “It is so important that different departments within the business talk to each other. Freight forwarders are keen to keep the goods moving and logistics teams make may decisions but not inform the finance/tax team."