4 minute read 12 Feb 2020
Port worker watching the ship coming into the port

Brexit checklist: how to prepare your company for post-Brexit business

By

Franky De pril

EY EMEIA Global Trade Leader

Helping clients navigate global trade.

4 minute read 12 Feb 2020
Related topics Global trade Tax

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Now that Brexit has been approved, what will happen?

The UK officially left the EU on 31 January 2020. The rest of the year will be a transition period in which the business community won’t necessarily feel the impact of Brexit. In 2020, people, goods, services and capital can still move freely between mainland Europe and the other side of the Channel. Yet it is important to be prepared.

How far along is Brexit?

Boris Johnson’s Conservative Party won an absolute majority during the UK parliamentary elections on 12 December. As expected, the Brexit ball started rolling again. The renewed resignation agreement of the prime minister was approved for the first time before the Christmas period in the British House of Commons.

Until the end of the year, we are in a transition period in which mainly political decisions are made. The UK and the EU are negotiating their relationship in trade, security and defense, international cooperation, etc. The negotiators are trying to conclude a new free trade agreement. It seems that the negotiations are moving toward an agreement with zero tariffs, zero quotas.

If the EU and the UK fail to reach a free trade agreement before the end of the transition period, the United Kingdom will still leave the EU in a no-deal scenario. Under Boris Johnson, the British parliament approved a clause that makes an extension of the transition period illegal in principle. It is precisely for this reason that it is important that companies do not sit still and that they use this period to work on these final must-do's.

1.    Are you registered to import and export?

Do you have an Economic Operator Registration and Identification number (EORI) number on both the British and European side of the Channel? You will need an EORI number for the mandatory customs formalities in the EU and the United Kingdom.

2.    Do you need customs permits to trade smoothly?

Evaluate your customs permits and analyze whether they facilitate your trade. Customs permits can simplify the import and export process. Following the Brexit, it might be good to renew your customs permits, expand them with the UK or replace them with local permits. Apply for these permits in time.

3.    Is there sufficient knowledge available in your company?

Knowledge of customs legislation, customs processes and customs formalities will be a must. To continue your trade with the United Kingdom, you will have to deal with specific procedures. For companies with little experience in import and export, that is a challenge. Invest in the training of your employees or contact a customs representative who can act on your behalf.

4.    Are you purchasing in the UK? And how do you deliver to the UK market?

Optimize your goods movements. Find out what impact the Brexit has on your transport methods, border formalities, travel times, inventory, etc. This is undoubtedly accompanied by costs. To print that, you need to investigate where you can optimize your business chain.

5.    Do you know the origin of your goods?

Monitor not only the new rules of origin from the future free trade agreement between the UK and the EU, but also those from the agreements that the UK concludes with other countries. Can you deliver a correct product origin to your customers? Did you take into account that components from the United Kingdom lose their EU origin after Brexit?

6.    Do you know the correct classification of your goods?

Do you know the ten-digit classification of your goods that is required for customs declarations and for Intrastat, which remains an obligation? In the case of a no-deal Brexit: do you know the most-favored-nation (MFN) rates of your products and the impact that those rates have on your costs?

7.    Are you aware of additional conditions to import and sell in the UK?

Take into account the possible differences in product regulations and import requirements in the United Kingdom after Brexit. Are you aware of the correct rules on labeling, just think of the UK Conformity Assessed (UKCA) that will replace the Conformité Européene (CE) standard? Are you prepared for sanitary and phytosanitary controls? Check whether the products that you put on the market in the European Union or the United Kingdom meet the safety, health and environmental requirements.

8.    Are your contracts Brexit-proof?

Can you still meet your delivery times and price agreements after Brexit? Brexit is not a basis for revising or terminating contracts. Also consider Brexit when you conclude new contracts. For references, choose for example European legislation and dispute settlement. What is the territorial scope and under which law are disputes resolved?

9.    Are your systems ready for the switch?

Your invoices become so-called export invoices, where there must be a clear link with the export documentation. The time of "carbon paper" in import and export is long gone. Since 2003, all declarations have been automated in different phases.

Summary

Brexit has been approved. In 2020, people, goods, services and capital can still move freely between mainland Europe and the other side of the Channel. Yet it is important to be prepared.

About this article

By

Franky De pril

EY EMEIA Global Trade Leader

Helping clients navigate global trade.

Related topics Global trade Tax