Deal or No Deal: 10 things that will impact post-Brexit Commerce
Scan your news app and you’d think that Covid-19 is the only challenge that our politicians are dealing with. Certainly, it is arguably the biggest, the most far-reaching and the most devastating, but it is not the only issue being debated in Brussels, Westminster and Europe’s other major seats of government. The issue of Brexit putters on, with Ministers on both sides of the Channel continuing to negotiate over a deal before the end of the year.
Irrespective of whether a deal is agreed upon, there are significant changes that will impact businesses in the UK and on the Continent from January 2020.
Below are 10 that we consider a good starting point. Clearly, there are many more – if you’d like help interpreting any of these for your own business, please get in touch.
UK trading entities:
· Communicate with your employees, suppliers, customers/clients and other stakeholders about your plans – even if you’re still formulating them. Follow your firm’s sign-off process, and ensure that customer comms or any employee comms subject to law are fully auditable and trackable.
· Get your EU base sorted out. If you intend to continue trading with EU customers in 2021, you’ll need an actual physical EU office, but a short-term fix could be to partner with an EU firm; for example, a Dublin-based entity. An extension to the current passporting arrangement may help calm skyrocketing rental prices in major European cities. Alternatively, you could always consider rethinking your trading focus, in the short-term at least.
· Delays for goods travelling into and out of the EU are likely to be a feature in 2021. For some businesses this may not be an issue, and may simply require managing customers’ expectations. However, if for instance your firm relies upon refrigerated/frozen products, you may need to examine your supply chain and transport arrangements.
· A new postal process means that if your firm sends goods via post to EU recipients, as of January 2021 you must follow the process that applies to goods posted to non-EU countries. Full government guidance, handily condensed into one single document, can be found here.
· Taxes on imports and exports will likely be higher after 1 January 2021, even if a deal is reached. Risk modelling the various potential outcomes will give you a good idea of best- and worst-case scenarios, and is certainly something we can help you with.
EU trading entities…
· Higher operational costs are likely: not only tariffs and VAT (which have to paid immediately on import) but also the price of administering it all. Processes may become longer and/or involve additional parties. Companies should consider updated business plans, with adjusted or even revised cash-flows as it will be more important than ever to keep an eagle-eye on this operational aspect.
· Even if your suppliers use the UK as a ‘land bridge’ you may experience delays at British ports after 1 January 2021. Even though the UK is a member of the Common Travel Convention, there is still a potential for longer waiting times.
· Know how to classify & record your origin of goods (even component parts): If the EU and the UK cannot strike a trade agreement before 1 January 2021, WTO identification will be mandatory. These will require a 6-digit code of identification: you can find out more in the WTO’s technical documentation.
· Check your current certifications, licences or authorisations are valid. With or without a deal, EU companies may have to take a different approach to authorising products.
· EU-based firms will need trading identification numbers in order to trade with the UK after 1 January 2021. You can request your firm’s number via the customs authorities of the country in which you are established.
As with all of the points listed above, if you’re not sure if this applies to you, please get in touch and we can advise you. As a minimum, we’d suggest you make sure:
1. Your Business Plan has been updated, with realistic sensitivities to the new operating world
2. You have a robust, trackable communications plan for regular engagement with your stakeholders (including employees, customers/clients, suppliers and shareholders)
3. You understand and can manage the dependencies across your entire supply chain
4. You have plans in place for the ongoing serious adverse effects of coronavirus, continuing well into 2021.