3 minute read 16 Nov 2018
Man walking down busy street behind Union Jack umbrella

Three key dates to know about Brexit

By

Gijsbert Bulk

EY Global Director of Indirect Tax

Seasoned indirect Tax Partner. Serving clients in Amsterdam and beyond. Litigator. Husband. Father of four boys. Chess player. Runner.

3 minute read 16 Nov 2018
Related topics Tax US tax reform Supply chain

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Should UK stay or should UK go? The Brexit saga will come to a climax in March 2019, and the world is watching. 

Unless there is a second referendum or extension, the UK will leave the EU on 29 March, 2019 and enter a transitional period. With so much yet to be agreed, businesses are advised to prepare for a no-deal Brexit with hard borders.

  • January 21, 2019: The last date for a deal to be presented to the UK Parliament. If there is no deal by this date, then members of Parliament (MP) will decide what to do next: possibilities could include a second referendum or to extend the transitional period.
  • March 29, 2019, 11:00 p.m.: If there is no second referendum or extension, then this is the date the UK will officially leave the EU and enter the transitional period (which the UK calls the ”implementation” period). During this time the UK continues to follow EU rules as both parties work to cement a future permanent relationship.
  • December 31, 2020: The end of the transitional period. After this, the UK is on its own.
ey brexit chart
Brexit action-planning
  1. As so much is uncertain, businesses should prepare for a no-deal Brexit with hard borders from 11 p.m. on 29 March, 2019. It makes sense to concentrate on what you know or what is highly certain. For example, you won’t know what duty/tariffs there will be until there is a deal but you do know what customs declarations look like for non-EU imports and exports, so prepare for those
  2. The focus should be on keeping goods moving, rather than cost management. Can you stockpile inventory? Can your suppliers deliver and do you have the warehouse space to do this? Should you change ports to one where there is less likely to be disruption?
  3. Map your supply chain from end to end. Are your suppliers set up to export/import from/to the EU should there be a hard border? Some UK companies are setting up supply chain companies in Europe to aid the import and export of goods from and into the EU. Marc Bunch, EY Global Trade Leader for the UK and Ireland, says that plan Bs and plan Cs are essential. “If you use Dover as a port, then make sure you can switch ports easily if a problem occurs. But bear in mind that lots of businesses may have the same plan B, which could make it less effective.”
  4. Look at staffing arrangements. A no-deal Brexit could cause the pound to drop in value against the euro. This may mean some European workers will return to Europe, where they can earn more in euros: look at the impact, should workers leave. Bunch says: “One client calculated that just 4% of its workforce was from the EU. However, further analysis at a functional level revealed that almost all of its truck drivers were from Eastern Europe. This would clearly pose a problem should a significant number leave. As a proactive step, the company has been sponsoring forklift truck drivers who work in their warehouses to get their heavy-goods vehicle licenses.”
  5. Have plans in place should things go wrong after 29 March. For example, if you don’t have enough parts to build your product, then who will decide whether you shut the plant or go on short time?
  6. After 29 March, businesses will need to start preparing for trade deals as and when they are agreed. Bunch expects most businesses will wait until after the end of any transition before deciding whether and what to relocate. He says: “This is very much a business-led process, but tax needs to be involved. People are having to make quick decisions based on fragmented information and it will be interesting to see what everything looks like when the dust settles.”

Summary

With so much yet to be agreed, businesses are advised to prepare for a no-deal Brexit with hard borders. This will require a focus on keeping goods moving, rather than cost management. Can you stockpile inventory? Can your suppliers deliver? Should you change ports to one where there is less likely to be disruption? While these are business decisions, tax needs to be involved in them.

About this article

By

Gijsbert Bulk

EY Global Director of Indirect Tax

Seasoned indirect Tax Partner. Serving clients in Amsterdam and beyond. Litigator. Husband. Father of four boys. Chess player. Runner.

Related topics Tax US tax reform Supply chain