Practical Steps to BREXIT-Proofing Your Business

brexit Dec 01, 2020
Practical Steps to BREXIT

1st January is almost upon us and whilst COVID-19 has somewhat taken over our 2020, BREXIT is a certainty and given the shortness of time, as at the date of this article, it looks as if a No Deal Brexit is the likely outcome. Regardless of whether there is a last-minute pivot away from this, Government advice currently is that every business in the UK should follow it’s “Check, Change, Go” advice. So, what can we do from a practice perspective to prepare for 1st January?

 

1. Tax, tariffs and customers

 

From 1st January 2021, an Economic Operators Registration and Identification (EORI) number is required to move goods into or out of the EU. All goods imported to the UK will also be subject to UK Global Tariffs from 2021. Please check www.gov.uk for more information on how to apply for this.

 

There will be new tariffs on many goods and services that are exported from the UK to the EU. Even if a deal is agreed, there may still be tariffs to pay on some traded items. Those goods that we export to the rest of the world that are currently subject to EU-negotiated tariffs will be subject to new duty rules too, many of which have yet to be agreed.

 

What should I do?
  • Review and monitor announcements about new foreign tariffs that could apply to your goods
  • Review your current commercial contracts to understand your commitments and how the different Brexit outcomes may impact them
  • Consider whether employing a customs agent to fill out customs declarations could be cost and time effective
  • Check if you will have to register for VAT in EU countries that you work in. A good accountant should be able to help you with this

2. Supply chains

 

Businesses should audit their supply chains to check which goods or services are procured from the EU. It is anticipated that supply chains will move slower from 1st January until things are more settled so expect delays in procurement.

 

What should I do?
  • Review your contracts. Do you know what will happen if certain clauses get activated, and will they work in your favour? Speak to all your suppliers and service providers about their plans for Brexit
  • Do you have suppliers who are crucial to your business? If so, speak to them about what their plans are for Brexit and ensure that your business can continue to run. If needs be, take the time to find a Plan B if they may be unable to fulfil their contract with you
  • Ask whether your suppliers are stockpiling to cover any delays at the borders
  • Find out if anyone in your supply chain will be putting their prices up to cover additional Brexit costs. Where any links in the supply chain are found to be ill-prepared for Brexit, look for alternate suppliers

 

3. Staffing

 

Any UK-based employees who are citizens of the EU, the European Economic Area (EEA) or Switzerland, must register for settled status to continue living and working in the UK six months after the end of the transition period on June 31st June 2021. A new points-based system for sponsored workers will be coming into effect from 1st January 2021. This will cover EU and non-EU migrants alike.

 

What should l do?
  • Check to see if all your staff can continue to live and work legally in Europe post-Brexit. Ensure you speak to any affected staff about their options. Otherwise, you may be employing staff illegally after 31st June 2021
  • British nationals working in Europe need to be able to continue to legally work there too
  • Don’t forget to review any consultants you employ as well

4. Finance

 

Expect fluctuations in cashflow. Additional stockpiling and storage costs to cover potential delays at the borders as the UK gets to grips with life after Brexit, new tariffs, price increases and currency fluctuations could all make a big dent in finances.

 

What should I do?
  • Speak to your bank or finance lender about finance options for temporarily increasing your cashflow and consider locking in currency prices at current rates.
  • It is better to plan in advance so if you are considering taking additional finance or speaking to an investor, then it may be best to do that now as quite often it can take time to put documentation in place and best to be prepared!

5. Regulatory changes and data

 

The majority of legislation in the UK has been driven from EU Directives/Regulations. The UK is now creating a new set of regulations to operate in parallel with the EU, but it is unlikely that they will all be ready in time for 1st January. These new regulations will more than likely cover every industry operating in the UK.

 

Data Protection will be affected in a major way by Brexit. From 1st January 2021, the EU is most likely to treat data transfer to and from the UK in the same way that it does other non-EU countries. Non-EU countries (as the UK will be) that wish to transfer data without restrictions, subject to GDPR compliance, from the EU are subject to adequacy decisions by the EU.

 

It is expected that the EU will make an adequacy decision on the UK during this transition period, providing all the conditions are met, but this is not guaranteed.

 

If an adequacy decision is not made, GDPR transfer rules will apply to any data coming from the EEA into the UK. To comply with these rules, you may have to take steps to put GDPR safeguards in place to ensure that data can continue to flow into your company in the UK from the EEA.

 

What should I do?
  • Stay up to date with changes to UK data protection law after Brexit by regularly checking the UK Information Commissioner’s Office website
  • The government is advising some UK data controllers and UK data processors to appoint an EEA-based representative: check if this applies to you
  • Even if you don’t transfer data to and from the EU, review where your data is stored. You may discover that your third-party cloud computing supplier hosts your data in the EEA and therefore Personal Data that you collect is inadvertently going out of the UK and your business would be in breach of data protection regulation
  • You may need to review contracts and other paperwork post-Brexit. Assess whether your privacy policy, terms and conditions, contracts and other documentation need revising to reflect post-Brexit data protection laws and other regulations. You must be transparent to data subjects how and where you are using their data

6. Review your business

 

Finally, take this opportunity to review your business and whether you are operating in the right market. Brexit may cause some UK businesses (small and large) to shift their focus from doing business in the EU. If your trade could be negatively impacted by Brexit, perhaps it may be time to review expanding into new markets outside of the EU.

 

What should I do?

 

The Department for International Trade is actively encouraging small businesses to test out new international markets: find out more on their website.

 

Please continue to follow One20Network for further Brexit insights and check out www.gov.uk for more information.

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