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How to cover the bare essentials of Brexit planning

Adam Jackson Adam Jackson

With a no-deal Brexit not yet ruled out here are the essentials to include in your Brexit plan.

Over the last two years we've advised organisations from all sectors on their Brexit planning. And while each business will need a tailored plan, we've uncovered some common focus areas for organisations in the run up to Brexit.

Read on for advice about surviving Brexit across compliance, continuity and cost.

Compliance - ensure your organisation, products and services comply with new rules and processes.

Both the UK Government and European Commission have published details on the changes that will follow a no-deal outcome, which should be reviewed to ensure you are aware of their implications on your business.

Regulation

Products meeting EU standards and tested in the EU will stay legal to sell in the UK and EU. Those produced to UK national standards (in areas where there are no EU standards) or conformity tested in the UK may not be legally placed in EU markets after Brexit. After Brexit, specific sector regulations and restrictions may apply in the EU to UK goods and services.

In relation to data, GDPR continues to apply in the UK and data can be freely exported form UK to EU. But you may need addition safeguards to be allowed to import data from the EU into the UK.

Some actions you should consider regarding regulation:

  • map all product lines: do they conform to EU or UK standards? Is conformity testing done by a UK or an EU body?
  • if EU standards apply do you need to switch conformity testing to an EU recognised organisation
  • check for specific rules in your sector (eg financial services, food, transportation, chemicals, life sciences)
  • check if you import personal data from the EU and, if so, apply appropriate safeguards.

Exports

Exports to the EU will require export and customs documentation after Brexit.

You will need to pay tariffs on exports to EU. You may also incur new tariffs or restrictions in markets in the rest of the world currently covered by an EU trade agreement (eg Mexico, South Korea).

Some actions you should consider regarding exports:

  • apply for a UK Economic Operator Registration and Identification (EORI) number. This is essential for you to continue to import and export with the EU
  • check what tariffs you will have to pay for exports to the EU and the rest of the world
  • review how you can minimise tariff costs – what tariff reliefs, distribution models or alternative sourcing might suit your business
  • identify customs and VAT process changes required in your business and through your supply chain.
Article Five stages of Brexit planning Find out more

Continuity - Minimise disruption during Brexit.

People

EEA citizens living and working in the UK will now have a right to remain and work in the UK after Brexit. They should apply for ‘settled status’ to secure their legal right to remain.

More widely, employers expect a growing skills gap and a tighter labour market in a no-deal scenario. Movement of people on assignments between UK and EU will also require new processes.

Some actions you should consider regarding people:

  • communicate with your employees: make sure they know they have a right to remain and how to apply
  • consider providing some Android devices in the workplace for people to use, they will need one to use the app
  • make yourself an employer of choice: develop your employer value proposition to attract and retain talent
  • update your global mobility processes (including social security, tax and visas) for UK- EU assignments.

Supply chain and distribution

The supply of finished goods, raw materials and components for your business and your customers via UK/EU ports may suffer delays of several days or more. The knock-on effects may cause wider supply chain disruption which could impact your operations and supply to customers.

Some actions you should consider regarding supply chain:

  • review stock levels, extend order times, consider fewer and larger consignments
  • speak to your logistics provider
  • plan what you would do if you have to stop production.

Cost - Take action to mitigate costs and protect cashflow

Cashflow and cost reduction

A no-deal scenario will impact your cashflow with reduced revenue (eg from reduced UK economic and consumer activity) and increased costs (tariffs, customs, labour, foreign exchange).

Some actions you should consider regarding cashflow:

  • stop or decrease discretionary spend
  • identify how to cut around 10% of costs
  • foreign exchange hedging
  • tighten debt management - chase outstanding bills.

Imports

Imports from the EU will incur tariffs and new customs procedures. All imports will now be eligible for deferred VAT.

Some actions you should consider regarding imports:

  • apply for HMRC transitional simplified customs processes in order to transport goods from the EU into the UK without having to make a full customs declaration at the border
  • utilise HMRC deferred VAT accounting arrangements for imports from all countries
  • review how you can minimise tariff costs – what tariff reliefs, distribution models or alternative sourcing might suit your business.

We are helping clients prepare for Brexit, whatever form it takes. This has been a five-minute read on planning for Brexit, get in touch with our Brexit team for a more detailed discussion.

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Consider the potential impacts and opportunities it will create for your organisation