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The ultimate Brexit survival guide

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The UK’s departure from the European Union will bring change for businesses of every size and in every sector.

It’s not only importers and exporters that are affected. Businesses that employ EU nationals or who supply or are supplied by businesses exposed to EU trade all face potential impacts.

That’s why the British Chambers of Commerce has drawn up a Brexit survival checklist.

Rob Johnston, Chief Executive of Cumbria Chamber of Commerce, said: “While some companies are already planning for the challenges and opportunities ahead, we believe that all firms – not just those directly and immediately affected – should be undertaking a Brexit ‘health check’, and a broader test of existing business plans.

“Time spent thinking through the changes that Brexit may bring to your business could yield real dividends.”

“Time spent thinking through the changes that Brexit may bring to your business could yield real dividends.”

While the final settlement between the UK and the European Union is still to be negotiated, there are steps that businesses can take now to start planning ahead.

Recent Chamber surveys have asked:

Have you devoted time to considering the potential consequences of Brexit – direct or indirect – on your businesses?

If you have one, have you consulted with your board of directors on Brexit – or scheduled an opportunity to do so?

Have you mapped your supplier and customer base – and considered how changes in the UK-EU trade relationship could affect them?

Our Brexit survival checklist has been shaped by the responses we received to these questions, which suggest that a significant number of firms are either watching and waiting – or taking no action at all.

We hope you find it useful as a basis for business planning at both operational and board level.

Your business doesn’t have to navigate Brexit alone. Call Cumbria Chamber of Commerce on 0845 226 00 40 to find out how we can support you.

 

WORKFORCE

Workforce and future skills needs

Migrant WorkerThere will be changes to how EU nationals register in the UK, the details of which are yet to be announced. If you employ non-British or non-Irish workers from elsewhere in the EU, the Government has issued guidance on their present and future immigration status.

To consider/take action: What percentage of your UK workforce is from the EU27?  Do your staff know the next steps to take to register as an EU citizen working in the UK?

What can you do to help retain skills and labour? 

All key information can be accessed here.

Future staffing requirements

Further ahead, there will be changes to the UK’s immigration regime. The British Chambers of Commerce are advising the Home Office on this, using feedback from across the UK Chamber network including research from Cumbria Chamber on the potential impacts on the hospitality and food processing sectors here.

To consider/take action: What will be your skills and labour needs over the next few years?  Will you need to hire someone from outside the UK?  What steps will you need to take to hire them? Could different arrangements (remote working) be feasible for your business?

 

CROSS-BORDER TRADE

UK/EU customs checks

As a ‘third country’, UK exporters to the EU after Brexit may in future be required to make customs declarations.

To consider/take action: What customs procedures do you comply with for trade with non-EU markets? Are you ready, if the need arises, to apply these to imports from or exports to the EU? 

Potential delays at UK/EU border

ExportingWith potential customs checks between the UK and the EU, there may be delays at the border.

To consider/take action: How resilient is your supply chain to potential border delays? Do you have contracts with penalties for late delivery? You may want to discuss with your logistics provider whether you would require new arrangements.

Do you need to increase your inventory and/or buy additional storage space?

Tariffs on UK-EU trade

The British Chambers of Commerce have been advocating for zero tariffs on trade between the UK and the EU after Brexit.

However, businesses should consider the potential impact of a situation where there are tariffs between the UK and the EU – based on the MFN tariff (which applies to countries that do not have a special agreement with the EU).

To consider/take action: Do you know the HS codes (international classification system) for your products? Do you know the EU MFN tariff that is applicable for your product?

If the UK and the EU do not reach an agreement that removes all tariffs, what would the impact of the MFN tariff be on your cost base? 

Rules of Origin in UK-EU trade

Even if the UK has a zero-tariff trade agreement with the EU, companies will need to prove that their product is of UK origin to benefit from this (usually, this means that 50-55% of the product has to be locally sourced). The exact terms of these rules between the UK and the EU are yet to be negotiated.

To consider/take action: If you are a supplier, has your customer asked you to provide proof of where you source your content? Would you be able to provide it if asked?

If you buy your components from local suppliers, have you thought about conducting an audit of where they source their materials? 

EU trade agreements with third countries

The UK Government has indicated its intention to secure the benefits of existing EU trade agreements with other countries. However, businesses may need to consider a scenario where the terms were to change and preferential trade terms are no longer available.

To consider/take action: Do you import or export using lower duty rates (‘preferences’) provided by the EU’s existing trade agreements? How might changes to, or the ending of, these preferential rates impact you?

Which markets (where the EU has a trade agreement) are particularly critical for you? Please let Cumbria Chamber know.

Customs facilitations, reliefs etc

There are a number of duty relief schemes available to UK businesses. It may be worthwhile for your business to consider applying for these. There is also a trusted trader scheme – AEO – that may be relevant to you if your supply chain also takes part in it. Speak to Cumbria Chamber to learn more about these.

To consider/take action: Do you plan to apply for additional customs relief or trusted trader schemes from HMRC? Read more about them here.

Customs/ export training

To consider/take action: Do you have a member of staff knowledgeable in customs and export? Would it be valuable to train a member of staff in this area? Cumbria Chamber is able to ongoing support and relevant training.

 

TAXATION

Import VAT

VAT

With the UK’s exit from the EU, it is assumed that the UK will also leave the EU VAT area. This means that import VAT may be payable, at the border, on goods imports from the EU. Deferment accounts (allowing for duty to be deferred for up to 1 month) are available to companies with 3 years’ VAT record.

To consider/take action: Do you have enough working capital to pay VAT on import of goods from the EU?

Have you considered ways to mitigate the potential cash flow impacts of the need to pay import VAT?

If you wish to open a deferment account (to postpone the payment of VAT on goods imports by 1 month), are you able to get a guarantee from your bank?

VAT registration in the EU (services sector)

If you trade in services, post Brexit, the working assumption is that after Brexit you may need to register for VAT/appoint a fiscal agent in every EU member state where you supply customers.

To consider/take action: If you are a services company, in how many EU member states do you supply services? In how many do you have VAT registration? How would getting VAT registration in every relevant state impact your cost base? 

 

CURRENCY/INTELLECTUAL PROPERTY/CONTRACTS

Currency risk

The months following referendum have seen significant currency volatility – this may re-emerge in future.

To consider/take action: What currency are you being paid in? Have you considered the possibility of further currency movements, and how this might affect existing and future contracts? Cumbria Chamber can give you recommendations for mitigating these risks.

EU regulatory regime

It is unclear whether UK regulators will be able to provide licenses for the EU market after Brexit; it is also unclear if notified bodies in the UK can conduct conformity assessment checks on goods destined for the EU market.

To consider/take action: Which regulatory agencies do you work with? What steps might you need to take to comply with separate UK and EU regulators in the future?

Intellectual Property

intellectual propertyIt is unclear whether trademarks registered in the EU would be applicable to the UK in the future.

To consider/take action: Do you own any Intellectual Property rights? Have you contacted trademark bodies / solicitors / IP advisors on how to protect your intellectual property after March 2019?

Contracts review

Some of the terms in existing contracts may no longer be relevant post Brexit, or may raise legal or practical questions in future.

To consider/take action: Do your contracts refer to any terms that should be reviewed in light of the UK leaving the EU; do they make references to the UK being a member state/to the EU? Does your contract rely on EU regulation applicable to contractual arrangements?

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