Brexit: March 29 is fast approaching

Brexit, Eu Employees, No Deal, March 2019

The UK is set to leave the EU on the 29th of March, 2019.

We think. Maybe.

You see, at the time of writing this blog post, another twist has emerged. The Prime Minister has requested a 3-month extension which, if accepted, would put the leave date back to June 30th. And what happens then is anyone’s guess.

Still, whether it’s 3 months or one week, the fact remains that nothing has changed where your business is concerned. You still need to prepare for a ‘No Deal’ Brexit. It’s the only sensible thing to do amidst the uncertainty.

Your mission: Leave no rock unturned

We’ve been pulling together resources over the last few months to help you plan and prepare for a difficult EU exit.

First thing’s first, we recommend you read our post about the 3 most important areas to consider where a ‘No Deal’ Brexit is concerned. You can find that here.

Next, review our ‘No Deal’ Brexit Planning Checklist. This six-page document covers:

● Movement of Goods;
● Supply Chain Analysis;
● Product Standards and Compliance;
● Contracts with EU Companies;
● EU Employees in the UK and Post Brexit Planning; and
● A few other matters you may have overlooked.

If you currently import from, or export to the EU, read this blog post to learn more about the Economic Operator and Registration Identification (EORI) number and why you need it.

And finally, take this GOV.UK questionnaire to identify anything else you need to do for your business before Brexit occurs.

Deal or No Deal – Be Prepared

Saint & Co. has been helping businesses and individuals manage their finances since 1884. In that time we’ve seen our fair share of political and economic upheaval. And the only way to make it through is to be prepared.

Contact us today if you’re concerned about the tax or business implications of a ‘No Deal’ Brexit. One of our friendly team members will be happy to answer your questions.

‘No Deal’ Brexit: 3 Important Areas to Consider

Movement of goods, product compliance, March 2019, Transitional Simplified Procedures

With so much uncertainty around what Brexit will mean, planning for a “No Deal” scenario seems sensible right now.

Businesses that buy and sell from the EU should have contingency plans in place which need to be flexible to cope with a variety of possible outcomes.

If a ‘No Deal’ happens after March 2019, here are some of the areas you should consider:

  1. Movement of goods

Customs declarations will need to be made and the UK is implementing a new electronic customs declaration system for businesses, so check if your systems and processes are up to scratch. UK businesses will need a UK Economic Operator Registration and Identification (EORI) number, and you can find the forms on the GOV.UK website, Brexit section: https://www.gov.uk/government/brexit

You may also need an agent to help with import/export declarations as you would for trading outside the EU. Check whether you need additional information from your carrier. Importers can register for Transitional Simplified Procedures (TSP), deferring declarations and paying duty at the border. There is HMRC guidance on the new electronic customs system in the Brexit section on the GOV.UK website (link as above).

An essential exercise for all businesses is Supply Chain Mapping – knowing where inputs come from and what product category they fall into can help assess potential tariffs. For businesses that only export to the EU this will be new and could be time-consuming. Further guidance can be found in the “Trade Topics” section of the World Trade Organization (WTO) website: https://www.wto.org/index.htm.

The EU Tariffs can be found at – http://madb.europa.eu/madb/euTariffs.htm

  1. Product compliance

UK product standards and regulations will be aligned to the EU at the point of exit, however in the event of “No Deal”, UK assessment and certification arrangements could cease to be recognised by the EU. See the Brexit section of the GOV.UK  website for further guidance.

  1. Business contracts and employees

If you have contracts with EU companies these may need to be redrafted to clarify the terms for trade, including VAT changes. If your business employs EU nationals then they should register for settled status. You will need to track the nationality status of employees going forward to ensure compliance with immigration rules and regulations.

Summary

Whether there is a “No Deal”, a brief delay in the UK’s departure and a “deal”, or a longer period of transition, we advise all businesses to research every scenario and “plan for the worst and hope for the best”.

For more information, please read our “No Deal” Brexit Planning Checklist.

No deal Brexit – What about VAT?

The Government and HMRC have updated its collection of high-level guides called “partnership packs”, intended to help businesses involved in importing and exporting prepare for changes to customs procedures after 29 March 2019 in the event of a “no deal” scenario.

If the UK exits the EU without a deal, UK businesses will have to apply customs, excise and VAT procedures to goods traded with the EU, in broadly the same way that already applies for goods traded outside of the EU.

In the event of a “no deal” Brexit the government’s aim will be to keep VAT procedures as close as possible to what they are now. This will provide continuity and certainty for businesses.

However, there will be some specific changes to the VAT rules and procedures that apply to transactions between the UK and EU countries.

Postponed VAT Accounting for Imports

The government has announced that in the event of a “no deal” Brexit, it will introduce postponed accounting for import VAT on goods brought into the UK.

This means that UK VAT registered businesses importing goods to the UK will be able to account for import VAT on their VAT return, rather than paying import VAT at or soon after the time that the goods arrive at the UK border. This procedure will apply both to imports from the EU and non-EU countries.

Low-Value Consignments

If the UK leaves the EU without an agreement, VAT will be payable on goods entering the UK as parcels sent by overseas businesses. Low-Value Consignment Relief (LVCR) will no longer apply to any parcels arriving in the UK. For parcels valued up to and including £135, a technology-based solution will allow VAT to be collected from the overseas business selling the goods into the UK.

VAT Mini One Stop Shop (VAT MOSS) will come to an to end

A further change if the UK leaves the EU without an agreement is that the UK will stop being part of EU-wide VAT IT systems such as the VAT Mini One Stop Shop which currently simplifies VAT reporting for UK businesses.

CUSTOMS CHANGES Businesses can currently move goods freely between EU countries. For customs purposes, this means that businesses trading with the rest of EU do not have to make any customs import or export declarations, and their trade with the EU is not subject to import duty.

In the event of a “no deal” Brexit there would be immediate changes to the procedures that apply to businesses trading with the EU. It would mean that the free circulation and movements of goods between the UK and EU would end.

HMRC is currently introducing its new Customs Declaration Service (CDS), which replaces its Customs Handling of Import and Export Freight (CHIEF) system.

From 11pm on 29 March 2019, for businesses trading with the EU, the impacts would include businesses having to apply the same customs and excise rules to goods moving between the UK and the EU as are currently applied in cases where goods move between the UK and non-EU countries.

This means customs declarations would be needed when goods enter the UK (an import declaration), or when they leave the UK (an export declaration).

For imports into the UK, a separate safety and security declaration needs to be made by the carrier of the goods (usually the haulier, airline, freight train operator or shipping line).

For exports from the UK, the export declaration includes the safety and security declaration.

How is Brexit going to affect my business?

How is Brexit Going to Affect My Business

Whether it’s hard or soft, one thing’s for sure; Brexit is going to impact your business.

According to an article in the Telegraph, both UK and EU small businesses are most likely to be hit the hardest by Brexit. And with a recent leaked government memo suggesting that the UK will be worse off, no matter the scenario, it’s important that you take the time to consider the consequences of the referendum on your business.

We appreciate that for many of our clients, this is a time of real uncertainty – and that uncertainty is unlikely to lift anytime soon. That’s why in this blog post, we wanted to offer a brief overview of our understanding of the situation as it stands.

In particular, a number of the businesses we work with import from, and trade with, Europe. The future of this business relationship with the continent is obviously a concern for many, and it’s something we’ve been keeping a close eye on.

The Curious Future of Trading with the EU Post-Brexit

For many businesses, exporting products to other countries is a terrific source of revenue, while importing materials can result in lower manufacturing costs. However, this could all change in the not-too-distant future.

If you currently trade with the EU, you’ll be well aware how intertwined it is with the single market. Should Brexit negotiations result in trade becoming more difficult, it could pose a huge risk to your business.

Where exports are concerned, the Office of National Statistics states that 48% of the UK’s total goes to the EU, while 59% of imports into the UK come from the EU. In 2016, imports to the UK from the EU totalled £318bn, while exports in the opposite direction were worth £235bn.

No matter how you slice it, these are significant numbers set to be exposed to a great deal of volatility and uncertainty in the coming months.

And After Brexit, VAT Could Be Paid Upfront on Imports

Earlier this year it was reported that, under the proposed legislation, over 130,000 UK businesses would have to pay VAT upfront on all goods imported from the EU post-Brexit.

Fast forward to this month, and the VAT problem remains, with many businesses unprepared for the tax implications of Britain leaving the European Union. Being forced to pay VAT upfront could result in additional and complicated paperwork and acute cash flow challenges.

And if you’re reading this thinking ‘my business doesn’t deal in imports, nor is it close to the VAT threshold, so this won’t affect me’ be prepared to think again!

The fact that so many businesses will need to pay upfront and recover money at a later date could have a potentially huge knock-on effect to other companies operating in the same or similar industry or marketplace.

For example, your business may be asked to shoulder some of the burden by paying your UK-based suppliers upfront for materials they’ve imported from the EU, therefore exposing your business to the same cash flow challenges and risks.

Getting Your Business Ready for Brexit

March 29, 2019, will be upon us before we know it. It’s vitally important that you take the necessary steps to prepare your business for Brexit sooner rather than later.

Some early key considerations should include:

  • Supply chain auditing – Even if your business is as ready as it can be for Brexit, you could still encounter disruption if your suppliers are not. It’s therefore worthwhile auditing your supply chain to ensure every link is robust and ready.
  • VAT and cash flow – As mentioned earlier, if you’re trading with the EU, you will need to be prepared for the possibility of paying VAT up front. Implementing a cash flow forecasting system is highly recommended.
  • Intellectual Property (IP) – European patents should still apply in the UK after Brexit, but other areas of IP, such as designs and trademarks, could lapse. Check the Brexit IP page for more information.
  • Employee nationalities – You will need to understand the rights and status of your EU workers to ensure you are employing them legally post-Brexit.
  • Contingency planning – There is simply no guarantee that everything will operate smoothly come March 30, 2019. Border procedures could quite easily grind to a halt, so you will need a contingency plan if you’re importing goods or services.

ICAEW has a terrific checklist to help you plan for Brexit. We recommend you take the time to review their resources in depth.

Need Some Advice? Let’s Talk

With over a century in business – and counting – Saint & Co. has witnessed and overcome a great deal of business challenges brought about by a shifting political landscape.

We can help you prepare for the upcoming changes and challenges posed by Brexit. Remember, it’s never too early to start planning.

Simply fill out our contact form, or call us on 01228 534371 to get started.