As we approach Christmas and the end of 2020, many of us will be hoping for a fresh start in the New Year, with a positive outlook after a challenging year for the vast majority of business sectors.
However, now that news of Coronavirus vaccines has brought renewed optimism to many, and older spectre has raised its head that felt largely forgotten in the wake of a global pandemic - Brexit.
The Transition Period ends on 31st December 2020, so while the UK officially left the European Union some time ago, we haven't seen any impacts of that, and won't until the departure comes into force from January.
Let's consider what likely changes lay ahead, and what we can do - while negotiations remain in the final throes - to prepare.
Post-Brexit Business Rules
The first thing to remember is that there could be impacts across the UK industries, and it's not just about companies who import or export from EU members.
There are multiple ways that Europe is linked with the way we do business:
- Skilled workers from EU nations.
- Reduction in migrant workers.
- Changes in overseas investments.
- Loss of free trade agreements.
- Potential customs delays.
What we can do now, is consider which parts of our businesses rely on European workers, suppliers, or customers, and strategise for the best way to either replace those supply chains or implement new policies to account for increases in costs and timescales.
Customs Tariffs from January 2021
If you import anything from the EU, customs declarations, import VAT and duties are liable to change.
Much depends on which countries such goods, components or commodities come from, and whether an individual agreement is reached with that nation.
It seems likely that, in the interim, we will end up with a 'No-deal Brexit', which means you'll need to account for imports as you would for goods from outside of the EU.
- Compliance requirements will change, so it's essential to check what documentation and declarations are required to import your specific products or parts.
- Contracts will need to be revised to identify any Incoterms that will need to be adjusted to account for changing risk exposure for import and duty costs.
- If you don't already use a customs broker, it may be wise to appoint one to manage the customs declarations for UK/EU trade. You can also use a freight forwarder to make these declarations on your behalf.
- Will you need to apply for new import licenses for any regulated goods or products that require an import or export license?
One of the most important steps is to register for an EORI number; this is an Economic Operator Registration and Identification code, which is required to import goods into or out of the EU - and until now, as an EU member state, UK businesses haven't needed one.
You need to apply to HMRC, who will issue an EORI number beginning with GB - which you'll need for any export or import documentation.
The next step is to make sure you know what taxes and duties will be payable:
Other SME Business Impacts of Brexit
While imports and exports are often thought of as the most significant impact of Brexit - even if you don't buy or sell anything to Europe, you might still see some other changes!
- If you hold any EU trademarks or IP rights, these will cease to apply to the UK. You may need to register for a new UK trademark, or community registered design.
- EU nationals working for your business are unlikely to be affected if they have been resident in the UK for a long time, or are already permanent residents. Still, should you have employees based in Europe carrying on work for a UK employer, you may find that any disputes fall into EU jurisdiction if covered by European Employment Law.
- Many British products are regulated to European standards. If you sell products to the EU, you may need to apply for registration under EU regulations.
- CE Marks granted through a UK Notified Body must be transferred to a Notified Body in the EU, and a new certificate of conformity issued.
All industries will likely feel some impact, be that in needing to apply for new licenses to sell or buy goods from Europe, coping with import delays while customs regulations get to grips with the changes or increased duties depending on any agreements reached with EU member nations.
The critical thing to remember is that, as with any far-reaching changes, there are likely to be implementation phases to give us all some time to adjust and put new policies and procedures in place.
As yet, we still don't know what the outcome will be of the final Brexit negotiations - but whatever the weather brings, SAS will keep you updated with any news, and are on hand to help with your financial reporting.