Cross-border tax complexity cost UK manufacturers £24bn in lost revenue last year, according to new research commissioned by tax compliance technology company Avalara, Inc. from the Centre for Economics and Business Research (Cebr).

The report finds that the stresses of navigating complex regulations post-Brexit continue to hold back growth for UK manufacturers, and is causing significant anxiety for business leaders.

As the economy works to recover post-pandemic, many UK manufacturing businesses remain optimistic for future European growth opportunities, with nearly three quarters (74%) of respondents stating they have plans to expand to at least one or more EU market.

Yet, in practice, the weight of compliance burdens and the realities of sweeping EU tax reforms on sales from outside the bloc appear to be impacting these plans. Nearly a fifth (18%) of manufacturers currently exporting to the EU are planning to exit from at least one EU market in the future, and 46% revealed that the fear of being fined for tax compliance has recently caused them to reverse plans to sell goods in a European country.

With little set to change in terms of the levels of tax compliance obligations on UK exporters, the research predicts that the investment loss due to tax administration complexity is expected to result in a further £4.4bn of value lost to UK manufacturers by 2026.

The constant flow of new regulations and the increased amount of work to stay compliant is causing significant stress for manufacturing professionals. In fact, for 54 percent of manufacturers, ensuring they remain compliant with tax obligations and regulations is the most stressful thing about running their business. 

Other anxieties weighing on leaders’ minds include fear of legal consequences (68%), fear of complex terms and conditions (42%), fear of fines (32%) and fear of losing time needed for other tasks (32%). 

For employees who work on tax compliance, the share of time spent on tax administration in the EU f was 18.9%. This time spent on tax administrative tasks has damaged productivity, with the research estimating that this caused a loss of £108m in gross-value added (GVA) overall.