Brexit: what business owners need to do

Posted onCategoriesBusiness

Business and Brexit

Theresa May’s firm words on Britain’s exit from the European Union last week will have been welcomed in many quarters. But when it comes to what Brexit will actually look like, the picture is still about as clear as a particularly obscure puddle of mud.

The Institute of Chartered Accountants in England and Wales is advising businesses who buy and sell from the EU to plan for a variety of outcomes affecting movement of goods, product compliance, contracts and finance. It’s a good idea to familiarise yourself with the government’s guidance for businesses, and to sign up for its Brexit emails if you haven’t already.

With 43 per cent of the UK’s exports going to the EU, and 54 per cent of the UK’s imports coming from the EU, it’s still very much to be hoped that a sensible deal can be struck as it would be in the interests of both sides. However, it’s wise to prepare for the possibility of no deal, and take anything else as a bonus. And if that does happen, it’s worth remembering that for both imports and exports, around half our trade is already with countries outside the EU, so nothing new is actually happening.

Here are some of the main things to think about:

Customs: After Brexit, companies might need to complete customs declarations for goods travelling in or out of the EU. Businesses might also be required to prove that the products they export originated in the UK under the World Trade Organisation’s Rules of Origin.

If there is no deal, exporters and importers will need to register for an EORI number to allow them to trade with the EU, and possibly apply for an export licence. Companies transporting goods between the UK and the EU would need to make safety and security declarations confirming that the goods are safe.

Firms can apply for Authorised Economic Operator status, which allows them to go through simplified customs procedures, but applications can take up to a year.

Tariffs: Exports and imports to and from the EU would be subject to World Trade Organisation tariffs if we leave without a deal. UK exports to non-EU countries may already be subject to tariffs or quotas, so you may be familiar with customs procedures; it will be more of a change if you only export to the EU.

Another issue could be product regulations and standards – Britain may set its own product standards that are different from the EU’s, but products sold to the EU would still need to comply with EU standards.

Contracts: If there is no deal, businesses will need to ensure that contracts and international terms and conditions reflect the new state of affairs. Contracts might need to be renegotiated as a result.

VAT: HMRC have said they will reintroduce postponed accounting for duty and VAT if there’s no deal. This will mean that VAT and duties due on imports from the EU can be settled on a company’s VAT return, instead of as the goods come into the country. The government also says it would aim to keep VAT procedures “as close as possible to what they are now”. Tunbridge Wells chartered accountants Charter Tax can advise you more on how VAT might change.