Es­sen­tial ad­vice for busi­nesses to avoid Brexit dis­rup­tion on Jan 1

The leaked ‘worst case sce­nario’ let­ter from Michael Gove high­lights the ur­gency for ac­tion

The Daily Telegraph - Business - - Business - By Lizzy Bur­den

WITH fewer than 100 days un­til the UK leaves the sin­gle mar­ket and cus­toms union, busi­ness lead­ers up and down sup­ply chains must con­cen­trate on pre­pared­ness for Brexit.

That was Michael Gove’s mes­sage to in­dus­try groups in a leaked let­ter seen by The Daily Tele­graph on Tues­day. Oth­er­wise, the Cabi­net Sec­re­tary warned, in a “rea­son­able worst-case sce­nario” about 7,000 port-bound trucks in Kent could find them­selves in two-day de­lays.

But stay­ing afloat amid the Covid-19 cri­sis has dom­i­nated most firms’ band­width. Ac­cord­ing to the Bri­tish Cham­bers of Com­merce, only 38pc of busi­nesses have com­pleted a Brexit risk as­sess­ment this year.

Many com­pa­nies say unan­swered ques­tions – re­gard­ing, for ex­am­ple, rules of ori­gin, the la­belling of food and drink to be sold in the EU and North­ern Ire­land and goods mov­ing west from Bri­tain to North­ern Ire­land – are hold­ing back their plans.

An­drew Hood, a for­mer ad­viser to David Cameron as prime min­is­ter and part­ner at Field­fisher, the law firm, says: “What­ever your views on Brexit, for bet­ter or worse it’s com­ing, and for some busi­nesses there will be op­por­tu­ni­ties, not just within the EU but in the wider trade world.”

So with the in­for­ma­tion avail­able now, what can busi­nesses do to pre­vent dis­rup­tion and make a suc­cess of Brexit on Jan 1?

Tax, tar­iffs and cus­toms

To move goods into and out of the EU, from Jan 1 firms will need an eco­nomic op­er­a­tors reg­is­tra­tion and iden­ti­fi­ca­tion (EORI) num­ber, all goods im­ported to the UK will be sub­ject to UK global tar­iffs, in ad­di­tion to other new tar­iffs if there is no Brexit trade deal – and pos­si­bly oth­ers even if there is an agree­ment.

New duty rules will also ap­ply to goods bound for the rest of the world that face EU-ne­go­ti­ated tar­iffs, although many of these have yet to be agreed.

Sarah Gun­ton, com­mer­cial part­ner

at Harper James so­lic­i­tors, ad­vises that firms should keep track of new for­eign tar­iffs, re­view their com­mer­cial con­tracts, con­sider hir­ing a cus­toms agent to fill out cus­toms dec­la­ra­tions, and check whether they need to reg­is­ter for VAT in EU coun­tries they work in.

Sup­ply chains

Com­pa­nies should ask their sup­pli­ers whether they are stock­pil­ing to cover po­ten­tial bor­der de­lays and check whether any­one in their sup­ply chain will be rais­ing prices to cover Brexit costs. “Covid-19 has taught us that re­silience is so im­por­tant and firms may look to di­ver­sify their sup­ply chains into new mar­kets to pro­vide greater se­cu­rity through the end of the tran­si­tion pe­riod and be­yond,” Ian Tandy, head of trade at HSBC UK, says.


From Jan 1, a new points-based sys­tem for spon­sored work­ers will come into ef­fect, cov­er­ing both EU and non-EU mi­grants. UK-based work­ers who are cit­i­zens of the EU, the Euro­pean

Eco­nomic Area or Switzer­land will need to reg­is­ter for set­tled sta­tus to re­main liv­ing in the UK six months af­ter the end of the tran­si­tion pe­riod.

Hood says firms should au­dit their staff now to check who can legally stay post-Brexit, and start the hir­ing process early.


‘Where any links in the sup­ply chain are found to be ill-pre­pared for Brexit, look for al­ter­nate sup­pli­ers’

For start-ups es­pe­cially, stock­pil­ing and stor­age costs to cover po­ten­tial bor­der de­lays, price rises and cur­rency fluc­tu­a­tions will take a fi­nan­cial toll. Firms should speak to their bank about fi­nance op­tions for tem­po­rar­ily boost­ing their cash flow, ac­cord­ing to Harper James.

Reg­u­la­tory changes and data

While most UK reg­u­la­tions are recog­nised in the EU and vice versa, and the UK is cre­at­ing a new set of reg­u­la­tions to op­er­ate in par­al­lel with the EU, there is no guar­an­tee they will be ready for Jan 1 – or that the EU will ac­cept them. The EU is likely to treat data trans­fer to and from the UK as it does other third coun­tries.

Gun­ton ad­vises that firms should re­view where their data is stored, keep abreast of up­dates from the In­for­ma­tion Com­mis­sioner’s Of­fice and as­sess whether con­tracts and other pa­per­work need to be re­vised post-Brexit, par­tic­u­larly on pri­vacy rules.

Michael Gove has urged com­pa­nies to act now to ‘get ready for new for­mal­i­ties’

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