Six Steps to a Brexit-Compliant Business
As UK’s departure from the European Union looms, British Chambers of Commerce (BCC) believes that all businesses should ensure they are Brexit ready. With careful planning and the right preparation, businesses big and small may even see greater bonuses in the future. As a foundation for planning at both operational and board level, the following six steps will help businesses navigate the Brexit minefield, with all the right resources in one checklist.
Step One – Workforce
Between Brexit date and 1 January 2021, Europe Union (EU), Europe Economic Area (EEA) and Swiss citizens can enter the UK for up to three months at a time for work, visit or study without a visa. A fee will apply for those who wish to extend their stay for up to 36 months for European Temporary Leave. Plans for visa-free access into EU/EEA and Switzerland from the UK may also be approved for travel up to 90 days in any 180 day period, for business meetings, leisure and short-term study.
UK nationals who seek recognition of professional qualifications to work in the EEA will need to check their home state’s policies, as outlined by The European Commission’s (EC) guidance on professional qualifications. UK citizens already recognised with a valid professional qualification by an EU country will remain valid post-Brexit. Therefore, it is worth considering gaining recognition in an EU27 Member State pre-Brexit.
Step Two – Cross-border Trade
In the event of a no-deal Brexit, non-VAT registered UK businesses that trade with the EU must get a UK Economic Operator Registration and Identification number (EORI) that starts with GB. However, those already registered, will automatically be issued an EORI. There are a range of duty relief schemes to choose from which may enable UK businesses to pay a reduced rate of Customs Duty for goods brought or received, but it will depend on what they are and what is done with them.
Commercial drivers operating in the EU must check the type of International Driving Permit (IDP) needed when visiting the EU. They must also get a motor insurance green card, display a GB sticker, and register commercial trailers over 750kg and all trailers over 3,500kg before towing. Businesses should learn about the International Terms and Conditions of Service and the correct contract terms regarding imports and exports.
Step Three – Taxation and Insurance
The way interest, royalties and dividends are paid between UK and EU companies may change. While tax may be deducted from some payments, under UK domestic law and existing double taxation with EU member states, businesses may be able to claim for full or partial exemption.
Businesses that stockpile must check with their insurance provider’s terms and conditions, for any restrictions on the amount of stock or raw materials permitted, including the way stock is stored, in case, for example, it might be hazardous. In the event of a no-deal Brexit, the UK will introduce postponed accounting. This means businesses registered for VAT in the UK will be able to account for import VAT on VAT return, so they will no longer be required to pay for goods when they arrive at the border. It’s also important to note the VAT change on parcels valued up to and including £135.
Step Four – Regulations and Compliance
Companies in the UK with a branch in the EU will become a third country company in the event of a no-deal Brexit. Businesses will need to use a ‘UK adopted IAS’ (International Accounting Standards) instead of ‘EU adopted IAS’ for financial years in the aftermath of Brexit. Businesses may face changes in the requirements for the products placed in the UK and EU markets.
For sector specific guidelines, the BCC has outlined preparations if we leave without a deal. E-commerce companies must also ensure they comply with the relevant EEA they operate in, as part of the eCommerce Directive, which regulates our online activity and Internet market. The responsibility of ensuring fair competition in the UK markets, including state aid, will move over to British regulators and agencies. The Competitions and Markets Authority (CMA) have also published documents outlining how they will operate if we leave without a deal.
Step Five – Importing and Exporting Goods
A UK EORI is essential to allow companies to continue trade with the EU after Brexit. HMRC will not accept non-UK EORIs, so businesses that have one must now register for a UK number. Choose between ‘transitional simplified procedures’ or Common Transit Convention (CTC), to reduce the amount of information provided at the border and simplify how goods are passed through customs.
It is also important to check tariffs as it may affect pricing decisions, business location and geography of supply chains – otherwise long-term business investments may fail to price and evaluate contracts efficiently. Consider creating a duty deferment account, to make one payment of customs duties a month instead of individual shipment payments. Carriers and commercial drivers will need the correct documents to travel between the UK and EU, including a Commercial Invoice. This outlines the goods being exported and their commercial value, in which duties will need to be paid.
Step Six – Business Contracts and Law Abidance
Some terms outlined in current contracts may no longer be relevant after Brexit, as the UK will no longer be part of the EU’s judicial cooperation framework. It’s important to check how the rules will change for commercial cases that involve the EU. Following the EU referendum, currency rates fluctuated, so businesses should consider further currency movements and its impact on future contracts. Parts of UK Intellectual Property (IP) will change.
In the event of a no deal Brexit, expect increased restrictions on imported and exported goods between the UK and EEA region. As such, businesses should check with the right holders to determine permissions. If there is no deal, the UK will become a ‘third country’ and data transfer with the EU will become stricter. To conform with GDPR successfully, businesses may face new compliance costs and additional restrictions.