In his second blog Dr Nik Kotecha OBE, Chief Executive of Morningside Pharmaceuticals Ltd and Chair of the East Midlands Chamber of Commerce Brexit Advisory Group, provides top tips on preparing for every Brexit eventuality.
These tips are authored by the East Midlands Chamber in their Brexit Checklist for businesses.
“In my last blog we advised that one of the key questions businesses should be asking themselves is ‘what are the direct and in-direct consequences of Brexit on my business’?
“There are four key areas we will look into here, which are: workforce and future skills needed, cross border trade, taxation; and currency, intellectual property and contract changes.
“Freedom of movement is one of the main reasons why the UK voted to leave the European Union, but for East Midlands businesses this does present a number of potential challenges.
“At present any EU citizen is allowed to move to, live in and work in any member state, which is likely to end at some point after March 29, 2019. The Government has come to some agreement with the EU that all EU citizens currently, here until the leave date, may be allowed to stay and work after we leave. However, any EU national arriving after March 29 and during the proposed 2 year implementation period may need to register if they wish to stay longer than 3 months. It will thus fall upon your business to check they have a right to work in the UK and that they have registered.
“Also consider what your future staffing needs will be over the next few years. If you have to employ people from outside of the UK, then understand what steps you may need to take.”
Cross Border Trade
“There are three key areas, which will affect any business which buys, or sells with the EU. These are: customs checks, trade tariffs and rules of origin on UK-EU trade.
“Customs checks may mean that all UK exporters to the EU have to make a customs declaration, which may mirror the current arrangements of trading with countries outside of the EU. The issue here is also the resilience of your supply chain, as there maybe border delays. So ask yourself – ‘will I need to change my arrangements with my logistics provider’ and will I need to buy additional storage space or increase my inventory’.
“Tariffs may also be an extra cost, although all UK chambers are advocating for zero trade tariffs between the UK and EU. If there are tariffs you will need to know the International Classification codes for your products and which EU MFN (Most Favoured Nation) tariff is applicable to your products? Also ask yourself what the impact on tariffs would be on your costs?
“Rules of origin changes would mean that preferential trade terms are no-longer available. This may mean that lower EU import/ export duties are no longer accessible, so how will this impact on your costs? Look at which markets where the EU has trade agreements, are applicable to your business, and plan to apply for duty relief, customs relief and trusted trader schemes. Having a member of staff who is knowledgeable in customs and exports would be helpful here.”
The Government has recently provided more clarity on VAT by introducing postponed accounting for imports, and has gone further by saying that these arrangements will cover imports from EU and non-EU markets alike
“If ministers had not acted, firms faced the prospect of having to pay VAT immediately on each cross-border transaction – creating significant cash flow issues for businesses. There is no further information yet on how this will work.
Currency, Intellectual Property and Contracts
“The last area to consider covers the impact on currency fluctuations and leaving the EU regulatory regime.
“Currency fluctuations are likely to return and may affect your contracts. With regards to the regulatory regime, it’s still unclear whether UK regulators will be able to provide licenses for the EU market post-Brexit. It’s also unclear whether notified bodies in the UK can conduct conformity assessment checks on goods destined for EU markets.
“Businesses should think about the steps they have to take with separate UK and EU regulations in the future. If you have intellectual property rights, have you contacted trademark bodies or solicitors about protecting your property? Do you need to amend your contracts once the UK leaves the EU?”