Brexit Day – What This Means For Your Business

 

Brexit is finally upon us. This historic event has loomed over the UK since its controversial introduction in 2015.

The UK will no longer be represented in EU institutions from 11pm GMT tonight and Northern Ireland’s three MEPs will no longer sit in the European Parliament, therefore essentially “Brexit is done”.

BREXIT TIMELINE

Brexit Day: Friday 31st January 2020
Deadline for Transition Period Extension: Tuesday 30th June 2020
Transition Period End: Thursday 31st December 2020

WHAT HAPPENS ON THE 1ST FEBRUARY 2020?

Britain now faces an 11 month “Transition Period” whereby the UK will continue to follow EU rules, maintain all current laws and contribute to the EU budget until their future trading relationship has been negotiated and recognised.

However, if no such deal has been agreed upon the UK will still leave the EU without a trade deal on the 31st December 2020, until then it is business as usual.

CHANGES FOR NORTHERN IRELAND?

After the transition period, Northern Ireland will be outside the EU while the Republic of Ireland will remain inside despite their connecting border. To ensure no hard border exists, Northern Ireland will continue to follow EU rules on VAT regulations and continue to enforce the EU’s customs codes at its ports on any applicable imported/exported goods, while the rest of the UK could follow a separate regime to both VAT and custom codes if they decide to do so.

This agreement leaves Northern Ireland essentially inside the single market, while joining the rest of the UK outside the EU, which creates a ‘special economic zone’ within Northern Ireland. Northern Ireland could act as somewhat of a duty-free footing into the EU, which will prove beneficial to NI businesses trading within ROI and the rest of the EU.

When there will legally be a customs border between Northern Ireland and Ireland after 31st December 2020, there will be no physical checks at that border to ensure no hard border exists straight after the transition period or in future years to come. Where the actual checks will take place will be on the new “Irish Sea Border” as stipulated in the Northern Ireland Protocol, within the agreed Withdrawal Bill. Any entry points for goods being transported between Northern Ireland and the UK Mainland could be subjected to administrative checks, customs paperwork and customs duty and taxes.

Taxes will only have to be paid on goods being moved from Great Britain to Northern Ireland and vice versa if the products are deemed “at risk” of then being transported into the Republic of Ireland.

A joint committee has been appointed and is made up of both UK and EU representatives and they will have the task of making an agreement during the transition period after 31st January 2020 what goods are considered “at risk”. If these newly introduced tariffs are paid on “at risk” goods that do not end up being sent on from Northern Ireland into the EU through ROI, the UK would then be responsible for whether to refund the money to the customer, depending on what is agreed during the transition period.

Northern Irish businesses are most likely going to be required to fill out exit declaration forms, which are forms for every item they ship into Great Britain and similarly Great Britain companies shipping into Northern Ireland. Despite the controversy surrounding the commercial “Irish Sea Border”, the Prime Minister has confirmed that he will personally see to it that the United Kingdom will continue to ensure the same unrestricted access for Northern Ireland’s businesses to the whole of the United Kingdom’s market.

Whilst the Withdrawal Agreement sets out how the UK will exit the EU, the practicalities of what this might entail has yet to be negotiated in the coming months. This could also prove to be a challenge due to the minimal time to negotiate the UK’s entire withdrawal from the EU.
If a deal has been reached, the UK will begin to operate under the new agreed terms from 1st January 2021.

HOW YOU CAN PREPARE:

As details surrounding UK trade post Brexit still remains ominous and unclear, there are various ways you can help ensure your business has a clear Brexit strategy for any potential problematic outcomes.

GENERAL

• Establish a Brexit planning function within the business to formulate, implement and review Brexit related strategy.

IMPORT/EXPORT

• Have a valid EORI number.
• Identify whether customs administration will be handled internally or by an external agent.
• If externally, potentially make contact with external agents to investigate pricing and register interest as demand is likely to be high.
• If internally, identify whether existing IT facilities/software within your company will be sufficient to process customs declarations or whether your company needs to invest in new systems to process declarations internally.
• Identify whether there is necessary capacity/skillset within your business to process customs administration or whether your company may need to invest in retraining existing staff or look at potentially recruiting.
• Review existing NI imports and relevant commodity codes to establish potential import tariffs.
• Review your current supply chain to assess alternative supply chains.
• Look at potentially establishing an Ireland premise to facilitate ROI projects.

BORDER DELAYS/ISSUE

• Look at potentially stockpiling supplies in advance of Brexit to avoid any shortages or price rises in immediate term.
• Build in potential lag time in the construction process to account for potential customs clearance delays to ensure production deadlines are not impacted.
• Potentially re-examine the terms and conditions of any existing customer contracts or sales agreements to ensure your company is protected in the case of any unforeseen delay resulting from Brexit.

CURRENCY FLUCTUATION

• Monitor currency fluctuation and their currency holdings continually to ensure you maintain the right mix depending on market conditions.

SCENARIO ANALYSIS

• Monitor both NI and UK sales figures to ensure your company is able to react to any potential downturn in sales.
• Monitor costs increases to ensure your company can make adjustments in real time to adjust for any potential loss.
• Analyse whether it would be possible to implement price rises without affecting sales.

If you have any questions or would like specific and specialised advice to help make your business take the necessary proactive steps to thrive, please contact one of our Brexit specialists.