Ongoing global tensions, shifting Government policies, and sudden trade restrictions can wreak havoc on long-distance supply chains.
We’ve seen tariffs introduced at short notice, import duties recalculated mid-shipment, and entire markets close overnight.
This kind of volatility impacts your cash flow, erodes your margins, and introduces an unwelcome degree of risk into long-term planning.
If you’re dealing with multiple jurisdictions, each with its own tax regime, you’re not just exposed to business risk, but tax risk too.
The business case for onshoring (or nearshoring)
Onshoring – or nearshoring – gives you some operational convenience as well as being a strategic tax and business decision. Here’s why:
- Reduced exposure to tariffs: By relocating production or sourcing closer to home, you limit your exposure to customs duties and retaliatory tariffs.
- Simplified VAT and import processes: Fewer cross-border transactions can mean fewer headaches around reclaiming VAT or navigating complex customs rules.
- Improved control and compliance: With suppliers operating in the same tax jurisdiction, it’s easier to manage compliance, transfer pricing, and documentation obligations.
- Speed and flexibility: Shorter supply chains are typically more agile, allowing you to respond faster to market changes and customer demand.
- Sustainability and PR: Consumers are increasingly favouring local, ethical, and sustainable supply chains — and that can be a tax-efficient brand asset.
Many Governments are also offering incentives to help businesses reshore operations or invest in local infrastructure.
For example:
- Capital Allowances may be available for new UK facilities or equipment.
- Research and Development (R&D) Tax Relief might apply if you’re innovating new processes to adapt to local supply chains.
- Freeports and investment zones offer enhanced tax reliefs and simplified customs processes if you set up shop in qualifying areas.
Before making any changes, it’s worth working with a tax adviser who understands the international picture – including any exit charges, repatriation taxes, or restructuring costs that may arise if you’re shifting assets or operations.
What should you do next?
We are recommending that our clients take the following actions:
- Review your current exposure: Look at your supply chain risks from both a political and tax perspective.
- Map out your costs: Factor in tariffs, shipping, delays, insurance, and currency volatility.
- Consider tax-efficient restructuring: You may be able to change your structure without triggering unexpected tax liabilities — but only with the right advice.
- Keep an eye on trade developments: Agreements and tariffs change rapidly; staying ahead can give you a crucial edge.
- Talk to your accountant or international tax adviser: Not just about the tax implications, but about how to align your supply chain strategy with your long-term business goals.
Bringing your supply chain closer to home might once have seemed like a step back.
Now, it could be the smartest move you make this year – not just for resilience, but for tax efficiency too.