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Preparing for Brexit – Business Owner’s Guide (Part 1)

With Brexit looming ever closer, business owners here in the UK need to begin now to prepare for the changes so that their companies can weather the change with confidence.  Today we’re taking a look at some of the most vital issues that you need to take care of if you want your business Brexit-ready.  Because of the level of detail, we’re splitting this Guide into two parts with part two to be published next week.

  • Build corporate customs infrastructure – British businesses will need to complete customs declaration forms on all goods crossing the EU border if the UK leaves the single market.  This will mean updates to business operations software.  Companies planning to trade across borders will also need to make sure internal systems communicate with both the EU’s customs technology and the new UK system.  The EU requires 8 copies of each customs declaration while the future UK requirements are, as yet, unknown.
  • Obtain Authorised Economic Operator status – Only 606 British companies are currently officially registered as “trusted traders” of goods across EU borders – a status that enables faster border clearance if the company’s procedures are deemed as compliant by authorities in both countries.  In contrast, more than 6,000 German companies and 1,550 French companies have qualified for this status.  Achieving this status is time-consuming and often complicated.  It can take up to a year so if you need to be ready for March 2019, you’ll need to start the ball rolling immediately.  According to a recent statement, an estimated 130,000 traders will be dealing with customs for the first time after Brexit.
  • Decide whether to make use of an EU free-trade agreement – While using a bilateral trade agreement can save costs on tariffs, it does increase bureaucracy.  With the trade-weighted EU average tariff of only 23% for non-agricultural goods, some exporters will pay rather than face compliance costs so you’ll need to look closely at this issue and make a strategic decision.
  • Map and audit supply chains – being ready for Brexit will hold no advantage if your suppliers are not prepared.  Around 63% of EU companies are already considering ditching UK suppliers and 40% of UK companies are actively seeking domestic suppliers.  A transition deal will provide more time for supply chains within the EU, but UK companies trading with third country suppliers may face problems.
  • Ensure adequate cash flow for VAT, additional inventory and investment – Because VAT will be charged at the border when importing goods and services companies may face cash flow problems.  Current intra-EU trade is exempt from VAT payments which means that companies needing to hold additional inventory as insurance against potential border delays may face further cash flow problems.

Next week, we’ll be looking at some more preparations you can make in Part Two of this article, so why not bookmark our website or follow us on Facebook or Twitter so that you don’t miss the next part of this handy guide for the future.