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Is your business ready for Brexit? - North Star Accounting

Recent headlines state that one in four small businesses are yet to review the potential impact of leaving the European Union on their customers or suppliers.  Many companies are not heeding government advice to “get ready for Brexit”.  Is that you?  If so, what do you need to consider?

 

The UK/EU withdrawal agreement expires at 11pm GMT on 31 December 2020. After that date, the UK will become a separate customs territory from the EU.  It’s not far off, but many businesses are focussed on managing the impact of COVID-19.   Unfortunately, you must focus on both… 

Remarkably at this late stage there is still uncertainty on the UK’s future trading relationship with Europe, so businesses need to have flexible contingency plans in place.  

1. Have you used the government’s transition checker to get guidance relevant to your business?

This tool tailors answers on your business, family, and personal circumstances to to get a personalised list of actions.

2. Are you in a business that is significantly affected?

If you import or export goods from/to the EU, there are many preparations that you should already have taken by now.  E.g. applying for an EORI number (Economic Operator Registration and Identification) and planning how you will provide trade and customs clearance documentation if it is required.

3. Do you know what the key sources of info are for businesses on Brexit?

There is so much information on the internet, its hard to know where to start…No one can say that UK businesses haven’t been warned. Whether they needed those warnings amidst a COVID-19 pandemic is another matter!

The GOV.UK website is the logical starting place.  The ICAEW has a superb summary of all of the main issues, starting with the most urgent issue of the movement of goods across borders. There are masses of links to more detailed information.

4. Have you planned any work-related travel in the EU?

Check that your passport has at least 6 months remaining and spend £5.50 on an international driving licence at the Post Office if you wish to drive abroad.

5. Have you spoken to your staff, customers and suppliers?

Brexit is an unsettling topic which many avoid.   Talk to them and explain your expectations from 1st January.  Confirm your working assumptions versus theirs.   Listen to any concerns and provide reassurance about any Brexit issues that your business faces and the plans that you have put in place.

6. What are the most important questions you should look at when assessing impact on your business? 

Note, this is not a complete list as there are many considerations that could spawn many more blogs…

Where will / can you get more cash if you need it?   The economic consequences of Brexit remain unclear even at this late stage, and will depend upon the terms of free trade agreements that the UK can negotiate with the EU and other key trading partners.   Some businesses have taken the step of increasing their overdraft facility, just in case. You may have to pay a setting up charge, but at least you will only pay interest if you actually end up using the money — which is what an overdraft is designed for.

What help do you need to access potential new markets?  Should new trade arrangements with countries outside of the EU/EEA make progress, there may be first mover advantage in accessing these markets.

Have your EU/EEA/Swiss-national employees registered for the settlement scheme?   Employees who are EU/EEA/Swiss nationals will need to register for the settlement scheme by 30 June 2021. The settlement scheme ensures they retain the right to continue to live in the UK.  Plan ahead for the relevant deadlines! 

How would additional customs duties affect your sales and supply chain?   This depends on the trade deal finally negotiated. To prepare you can understand the different commodity codes of your major imports and exports and the tariff rates that would apply if there is no deal. This page tells you what to do from 1 January 2021.

Are you ready for new VAT and customs duty requirements?  Whether or not the UK and the EU enter into a free trade agreement, new customs procedures and processes will come into force on 1 January 2021. The UK’s negotiations with the EU will have zero impact on the urgent need to review your importing and exporting arrangements and potentially take action.  

Have you registered for simplified import procedures?  Consider if you are eligible for simplified import procedures. They mean you may not need to settle VAT and duties  on imports immediately at port.

How will your principal contracts be affected by Brexit?  Review your principal contracts to see how they would deal with uncertainty or different trading conditions. Do they adequately define the terms for trade across EU borders, including how VAT is dealt with?

Do you receive personal data from the EU/EAA?  From 31 December 2020 the EU GDPR will no longer be law in the UK.  After transition, the UK will be a “third country” until the EU makes an adequacy decision regarding the UK. Until then, the transfer of personal data from the EEA to the UK will only be allowed if ‘appropriate safeguards’ are in place.

How will changes to VAT affect you?  HMRC is introducing new procedures for parcels sent into the UK from abroad.  Did you know that anyone sending a parcel valued at £135 or less into the UK from abroad will need to register in HMRC’s new digital service and account for VAT due?

Its time to “get ready for Brexit”.  Its coming! 

 

If you would like to chat about Brexit or any other support, please get in touch.