Leave or remain, we are hopefully nearing the end of the Brexit line. Reading an article by City AM, only 1 in 3 businesses are ready for Brexit.
No matter how big or small your business is there are some basic checks that you can take to prepare yourself whatever the outcome will be. Deal or no deal.
Don’t leave your head in the sand thinking none of this will affect my business. No one knows for certain what will happen with Brexit and the only certainty for UK businesses going forwards is that uncertainty will continue.
As a business you should consider planning for a no-deal, ensuring you have an understanding of how customs procedures and checks work in place, in case they become the order of the day in 2019, 2020 or beyond.
Onwards and Up brings you a quickfire Brexit checklist of things to review and do in your business, to get ready for the final countdown.
Yellow Hammer Brexit Document
Have you read it yet? If not, it is always good to have a quick squat up on what Brexit no-deal could mean for you. Both on a personal and business level.
If you have registered your business trademarks already, then that is great. Whether doing business in the UK or exporting it is important that you own the rights to your business name and ensure that you can manage to control how your name is used to protect brand reputation.
Post Brexit whilst the European union trademark will still be valid, however, the UK part of the trademark may not be. Therefore, you will need to seek legal advice and ensure that you secure your brand protection for the UK market.
European Supply Chain Management
What does your existing supply chain look like? Are you importing and exporting materials and to the EU prior to completion? Assess your supply chain and where possible try to streamline your processes to reduce your liability and risk of increase import duties, delays and documentation.
Try to identify purchases from other countries which have Free Trade Agreements (FTAs) or Generalised System of Preferences (GSP) agreements with the EU. How significant is this in your sourcing decision?
With deal or no deal in mind, UKFT has put together a database providing details of import tariffs to assist fashion brands to prepare and calculate their new product costs liabilities.
Exporting to the EU After Brexit
If you have not yet got one and you are exporting to the European Union after Brexit you will be required to have an Economic Operator Registration and Identification (EORI) number. You’ll need an EORI number to move goods in or out of the UK if there’s no Brexit deal.
An EORI number is a unique ID code used to track and register customs information in the EU.
Who needs an EORI number?
You can register for an EORI number as a business or an individual. All EU based importers and exporters need an EORI number.
If your company is part of a larger holding group, then the application for an EORI number must be processed by the parent company, not the subsidiary. If there’s a no-deal Brexit
EORI number s are not required if you:
- provide services
- move goods between Northern Ireland and Ireland
If you use a post or parcel company to move goods, they’ll tell you if you need an EORI number.
New Tariffs and Rules
Your EU importer will need to pay tax and duty on your goods after Brexit. This will depend on the classification of the goods.
The average tariff on UK exports to the bloc would be 4.3 percent, it calculates, while the average on imports from the EU into the UK would be around 5.7 percent. Tariffs in some sectors – for example in agriculture and food, the car industry and textiles – would be “significantly higher (CBI)
Identify the UK tariff codes for all your products by searching trade tariffs on the GOV.UK website. Your tariff code allows you to fill in declarations and other paperwork, check if there’s duty or VAT to pay and any potential duty reliefs. You can get advice on how to classify your goods by contacting HMRC.
Check the “origin” for customs purposes of all products when exported to, or imported from EU countries. Identify the UK/EU/non-EU content (including all components and raw materials) and whether your goods may qualify as being of UK or EU origin.
Managing Currency and Cashflow
If you’re just getting started in importing or exporting, there are ways to make sure you’re not paying more than you have to.
Refer to your bank and see if they can provide any assistance on currency accounts and managing your money after Brexit
Alternatively, you can save money by using a company that specialises in international transfers. One example is TransferWise. It’s a multi-currency borderless account that lets businesses send and receive money in foreign currencies without high fees or bad exchange rates.
TransferWise will always give you the real, mid-market exchange rate. It also has no hidden fees. All you will just pay one fee each time you make a transfer.
Therefore, if you are regularly paying suppliers based overseas, or receiving payments in a currency other than sterling, see if you could save with TransferWise.
European workers Rights and Employment
How many of your staff are EU nationals? What is the level of risk if they leave and how might it impact on your business? Any risk areas identified around skills and language?
Identify and consider employees who are based permanently or temporarily in EU countries. What are the employment law implications for them and the business?
Warehouse and logistics strategy post Brexit
Do you have full confidence in your manufacturing partner in the EU? Or do you have processes in place within your factories to meet quality assurance of your products?
If yes to these and the EU and the wider free trade agreement areas are your core trading markets. Why not try and connect with local warehouse and distribution companies to ensure your products can flow tariff-free within the relevant areas.
No more picking and packing in the UK, but distribute directly from your factory or warehouse.
Free Trade Agreements and Exporting
As well as being part of a 28 state free trading block, over the years wider regional trade agreement has been created to reduce barriers and increase the flow of trade.
In the event of a no-deal Brexit, the UK would suddenly lose tariff-free access to these markets and it would have to trade under World Trade Organization (WTO) rules.
The European has about 40 free trade deals, covering more than 70 countries. That means the UK, as a member of the EU, can currently trade with countries like Canada without having to pay taxes on imports (tariffs) on most goods.
To date, the UK has signed 15 “continuity” deals covering 40 countries or territories. Altogether, these deals are worth about 8% of total UK trade
Last year, the EU accounted for 46% of UK exports, while the US accounted for 19%.
Identify what documentation requirements might apply for your products when exported to, or imported from EU countries by searching the EU Commission Market Access Database. When choosing a market, you can’t currently select the UK so select either USA or China to understand requirements for a typical non-EU country. You can also access the EU Brexit Preparedness portal, to understand the potential outcomes for your sector.
When exporting from the UK to the EU, you will need to provide a commercial invoice
which outlines the goods you are exporting, as well as their commercial value. You will need to pay duties based on this. Customs will view the commercial invoice and charge customs clearance to clear your goods in the exporting country.
Maintaining Good Communication With your EU Customers and Suppliers
Lastly to maintain good levels of business with EU suppliers and buyer communication is king. Make sure you identify your EU clients (or suppliers) who are particularly cost-sensitive and might be disrupted by extra costs for import duties, customs clearance costs, higher freight costs, or currency fluctuations.