How to prepare for Brexit now
To get British businesses ready for Brexit, the government launched their “Time is running out” campaign on Sunday 18 October. The strapline urges business leaders to prepare for an Australia-style arrangement when we officially leave the EU Single Market and Customs Union on 1 January 2021.
The new year is creeping up on us fast. In fact, there are less than 7 weeks left to get your business ready for a host of new tariffs, extra customs checks and more. Here’s a start to prepare for as smooth a transition as possible, whatever industry you’re in.
The 5 points below are the key issues businesses will face come January. So, read on if you:
- Use suppliers in the EU
- Export goods to the EU
- Provide services to the EU
- Travel to the EU for work purposes
- Employ any non-UK nationals
The UK government may not have agreed a trade deal with the EU yet but they have published a fair amount of useful information to help UK businesses prepare. However, according to a recent Yougov survey of 1000 British businesses published last week, half of SMEs have had no communication over Brexit plans.
The same survey found that 42% of businesses feel unprepared and not set up to tackle a new phase of trade. If that applies to you then don’t despair. HMRC is currently writing to 200,000 businesses who trade with the EU to explain about the new customs and tax rules. Expect to hear soon if you’re one of these traders, but even if you’re not, there are clear steps that you can follow to protect your business. Below you’ll find all the information you need to inform how you do business in our new trading environment - whatever that may be.
This is the biggest Brexit issue facing UK businesses and, unfortunately, still the least clear. The EU is currently our largest trading partner. 51% of all our imports are from EU suppliers and 45% of our exports go to the EU. New tariffs, duties and customs checks will undoubtedly affect any business involved.
According to the latest government advice, business leaders should be preparing for an ‘Australia-style agreement’ to anticipate these customs duties and tariffs. Under those terms, we’ll follow World Trade Organisation rules, so standard international taxes and customs checks will apply to all traded goods or services.
However, the call to prepare for an Australia-style agreement was announced following the breakdown of talks three weeks ago. The EU has since come back and an agreement is being sought on both sides once again, so watch this space.
Imports and Customs
It certainly doesn’t hurt to prepare for WTO regulations as it’s likely the same processes will be relevant whatever agreement we end up with. The government has created step-by-step, tailored guidance on importing goods into the UK and for businesses who export goods from the UK. Check these pages to see specific advice for your business.
You can hire a person or business to deal with the additional customs checks and charges we’re likely to face. Take a look at the government’s list of Customs agents and fast parcel operators who can help you declare imports and exports for customs. They’ve also created a guide to take you through that process, which should help lighten your workload.
Don’t forget about VAT
Currently, EU goods don’t have VAT paid on them until they’re sold to the final customer. If we don’t stay in the Customs Union then EU goods will be like all other imports from around the world. This means that VAT will be payable by the 15th day of the following month, no matter where in the supply chain the item is needed.
Upfront VAT costs could create potential cash flow problems for some businesses. If you’re worried about the implications then assess your business finance needs now. Don’t forget that you have until 30 November to start an application for a government-backed CBILS facility. Under the scheme there are no interest or fee payments for the first 12 months.
At MarketFinance we offer a range of CBILS accredited funding solutions to bridge the gap in your cash flow. You can choose between a CBILS loan, Revolving Credit Facility and Invoice Finance, depending on your business needs.
For many businesses trading in the EU currently, it makes sense to look farther afield for trade. If you’re considering exporting to other territories consult this list of existing trade deals with non-EU countries.There’s still time to find new suppliers and markets. As we’re all more accustomed to doing business online, it’s never been easier to strike new relationships.
From 2021, all British nationals will need visas to enter any country in the EU. Each country may have its own specific visa requirements, so prepare for different fees and application processes. Every visa will be individual to a country you apply to, so you can’t move around freely in the EU or Schengen zones.
If you anticipate business travel then make sure you take into account the extra steps you need to take and the time you’ll need to complete them. As many of us reconsider travel and face-to-face meetings in the short-term, avoiding international travel may be a business decision that sticks around. Make sure online scenarios are optimised for the business you’re in.
Come 1 January, the rules for non-UK nationals entering the country will change. Any EU citizen applying for a skilled worker visa has to have a job offer from an approved employer sponsor before they apply. Make sure you have legal visa sponsorship status from the government if you’re planning on employing any skilled migrant workers from 2021. You can read full government guidance on employing EU citizens in the UK if it’s relevant.
Use the government’s Employer Toolkit to help you advise your existing EU workers on what they need to do. Checks will change from 30 June 2021 so there are 9 months left to organise. Make sure they apply to the EU Settlement Scheme if they want to continue living here after that date.
There are still unanswered questions surrounding Brexit. While talks have resumed, it’s unclear exactly what deal we’ll end up with and how your day-to-day will be affected. However, preparing for extra customs checks and tariffs is sensible as they are more than likely to be introduced.
Despite all this uncertainty, your cash flow doesn’t need to be. You have until the end of November to start a CBILS application that can take off some of the financial strain that Brexit could pose to your business. Find out more about how we can help support your business finances whatever extra costs Brexit might introduce.
For a personalised summary of the actions your business may need to take, use the simple tool on gov.uk/transition.