Brexit is looming!
Alongside the ongoing pandemic, we must bear in mind that we are only just over 70 days from the end of the Brexit transition period.
Sadly, at this stage, there has been no agreement reached with the EU. We have no trade agreement, whether on terms similar to those that Canada has, and are looking down the barrel of a ‘no deal’ exit, also known as ‘an Australia-style’ exit. Negotiations are ongoing, but seem to be lacking any progress that may inspire confidence or optimism.
Trading with the EU
On the assumption that the Australia-style option will be the one that businesses are faced with, HMRC is writing to 200,000 VAT-registered businesses who trade with the EU to set out the new customs and tax rules coming into place and how to deal with them.
The letters explain what businesses need to do to prepare for new processes for moving goods between Great Britain and the EU from 1st January 2021, including making sure they have a UK Economic Operator Registration and Identification (EORI) number, deciding how they will make customs declarations, and checking if their imported goods are eligible for staged import controls.
Australia-style terms would be based on simple principles of global free trade.
As well as checking duties and customs procedures for exporting, businesses are warned that if staff travel to the EU for work purposes they will need to check if they need a visa or work permit and apply if necessary.
Businesses employing overseas nationals will need to prepare for the implementation of the new immigration system. From 1 January 2021, if they want to hire anyone from outside the UK, including from the EU, they must be a Home Office licenced sponsor.
A UK business or organisation that receives personal data from contacts in the EEA may need to take extra steps to ensure that the data can continue to flow legally at the end of the transition period.
Anyone providing services in the EU, must ensure that their qualifications are now recognised by EU regulations to be able to practice or service clients in the EU.
Business Secretary Alok Sharma said: ‘With just 75 days until the end of the transition period, businesses must act now to ensure they are ready for the UK’s new start as an independent trading nation once more.
‘There will be no extension to the transition period, so there is no time to waste.’
Andrew Gray, head of Brexit at PwC, said: ‘Events of the last few days show that there is now a very clear risk that the UK and the EU do not agree a trade deal.
‘Even if talks resume, change is coming in a matter of weeks and organisations must be ready to move people, goods, and data differently from 1st January. ‘Many of the changes will be required, deal or no deal. Whether they’re making light bulbs, certifying organic wine or planning post-Covid business travel, organisations have to tackle what’s currently known and leave a margin to deal with what’s still opaque.
‘There have been a number of false starts and ends throughout the Brexit process but the transition period deadline at the close of this year isn’t one of them.’
So what can businesses do to prepare?
There is limited guidance on the gov.uk website, but there is at least some information. Visit gov.uk/transition for the latest. You can sign up to receive updates whenever anything changes.
If you import or export, you should definitely make this a priority. There are steps you need to follow, which include obtaining the EORI number mentioned above.
Please make sure that you stay up to date on developments and are ready to adjust your processes accordingly.