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Many companies are exploiting a hole in border security between Ireland and Northern Ireland and illegally shifting goods into the UK without paying taxes, according to a new report.

In research illuminating the changing trade regulations on transport and logistics companies, freight outsourcing solutions firm DDC FPO said industry experts were currently keeping an eye on changing trends as a result of Brexit.

It said one feature was the illegal movement of goods across borders.

The report said many companies were taking advantage of the lack of border security in Ireland and escaping VAT and customs duties for goods destined for the UK as a result.

Garth Young, MD at customs broker and intermediary Wellmark Customs and Logistics, said firms had spied a way of saving money in the short term: “They say, ‘Look, there’s no checks at the border, we just drive in,” he said.

“The courts are going to be full at the end of this.”

DDC FPO said that while HMRC was permitting companies to defer or simplify customs declarations for certain goods during the current six-month grace period, keeping adequate records of all transactions was still required.

It said: “Additionally, declarations for controlled goods such as alcohol, tobacco, and animals are not eligible to be deferred or simplified.

“Without the proper paperwork on file for their goods, responsible parties can be taken to court, fined, and possibly imprisoned - repercussions that can easily put a company out of business.”

The report also highlighted the ongoing Brexit-related challenges faced by hauliers, 3PLs, freight forwarders and warehousing firms.

It said 69% believe the problems will continue to hit their businesses for longer than 12 months.

In particular, 100% of 3PLs responding to its poll said they would continue to face obstacles caused by the UK's withdrawal from the EU for at least the next year.

Hauliers were split on the issue, with 50% expecting the challenges to last 12 months or less.

“Based on our research, we’re preparing for a significant number of organisations to increase dependency on business process outsourcing over the next year, particularly for things like staffing and customs processing,” said Art Zipkin, DDC FPO president.

“For many companies, handling everything in-house - particularly customs paperwork - just won’t be sufficient anymore.”