Brexit Business Planning: What you Need to Know
As the UK plans to shortly leave the EU, here are some of the key things your business needs to think about to prepare to trade post-Brexit and beyond.
Brexit’s been in the pipeline since the EU referendum in June 2016 and it officially happened in January 2020. But it’s only in January 2021, when the UK formally leaves the European single market and customs union, that businesses will begin operating under new post-Brexit rules that could have vast and often complex implications.
The impact of Brexit and the potential risks faced as a result of it will vary significantly between different industries and businesses. But research by Aldermore Bank found that nearly half of SMEs that import goods and services from the EU have made no preparations for Brexit.
And with the possibility of a so-called ‘no deal’ exit still on the table at the time of writing, businesses are having to consider a broad range of scenarios.
Here’s what you need to know about Brexit business planning.
The Brexit impact on businesses
Many of the changes that businesses have to put in place will be needed whatever the outcome of trade negotiations.
The obvious and immediate impact will be felt by businesses affected directly by the creation of new trade barriers, with any business importing or exporting products or services to and from Europe having new rules to follow.
For instance, those businesses will now have to make customs declarations and understand the specific guidelines for different types of goods, including taxes and duty. Further details on importing and exporting can be found on the Government’s website. Other issues to consider will include health and safety requirements, product labelling, environmental standards, packaging, personal data and certain qualifications and licences.
What you can do to prepare for Brexit
The onus is on each organisation to understand exactly what the changes will mean for them. The challenge for businesses is made stiffer by the uncertainty that surrounded the negotiations and a lack of real guidance in place for what businesses need to do to prepare.
Key things to think about preparing your business for Brexit:
- To trade with the EU from 2021 you’ll need to get a GB Economic Operators Registration and Identification (EORI) number, or risk delays and extra costs in importing and exporting. Importers and exporters in the UK are given a EORI number by HMRC. This identification number is used in customs procedures.
- You should also establish where responsibility lies within your organisation for dealing with customs, so that they can focus on understanding what needs doing and when. Unless you want to handle the potentially complex customs declarations process yourself you’ll want to identify an intermediary (such as a broker, freight forwarder or customs agent) to work with to help you meet the requirements.
- Some of the rules governing the use and storage of personal data may well change. While those changes aren’t yet clear, we already know that the General Data Protection Regulation (GDPR) will continue to apply. GDPR is a set of legal guidelines for the EU that focuses on the processing and collecting of customer data. Businesses should keep an eye on the Information Commissioner’s Office (ICO) website for any further developments.
- Whether trading goods, services or both, firms will need to review the non-tariff barriers in place at an individual country level to understand what arrangements they might need to put in place once the UK leaves the single market.
What you need to do to prepare for Brexit
Above is just some of the important initial actions you can take to make sure you’re prepared. This transition checker from gov.uk will help you identify anything else you may need to do.
We employ EU nationals and I also travel for business sometimes. What do I need to know?
There will be checks to undertake if you travel to or from the EU as well, with visa changes taking effect, and we can expect an overhaul of working rights affecting EU nationals employed by your business.
» MORE: Driving in Europe post-Brexit
Any employees without a valid Permanent Residence Document or Indefinite Leave to Remain/Enter’ status will have to apply to the EU Settlement Scheme to remain in the UK. Applications can be made up until 31 July 2021. So, make sure you’re aware of the status of employees that don’t yet have the relevant documents.
One option, where possible, might be to take advantage of the new Skilled Worker route under the Tier 2 Points Based Visa system. More information on how this works can be found at www.gov.uk/tier-2-general. If you’re planning to hire EU workers in the near future, see if you can do that before the rules change at 11pm on 31 December 2020.
What about continuity plans to help us deal with the unexpected?
We’re still in the dark as to many of the practical implications of Brexit, while the pandemic has caused enormous disruption. So for some businesses, the priority right now might simply be to ensure they are sufficiently resilient to endure difficulties such as exchange rate volatility, supply chain problems and potential unexpected costs.
If you haven’t already, now is a good time to review the business’s cash flow, make sure there’s enough capital to cover day-to-day costs and explore additional financing options should you need them.
What should I do if I haven’t put plans in place or left it too late?
Firstly don’t panic, you can access the gov.uk tracker detailed above, or use one of the below Brexit business checklists to help you find out what you need to do and when.
Where can I find a Brexit business checklist?
There are several available online. The most comprehensive include:
Jeff is a freelance journalist who writes across finance & business. He was the personal finance editor at The Scotsman & Scotland on Sunday & a member of the Financial Services Consumer Panel. Read more