Hold tight! Business guidance in the event of a no-deal Brexit
With less than six months to go until the UK leaves the EU – and with no post-Brexit deal yet on the table – there’s no doubt that we are entering uncharted waters. So, what should you do to prepare your business in case of a no-deal Brexit?
You may be aware that the UK’s Government has insisted that preparations for a no-deal Brexit scenario are part of its overall Brexit preparation strategy. Indeed, the Prime Minister’s Chequers statement, issued after her cabinet’s infamous July away day, included a pledge to step up preparedness for all possible outcomes of the negotiations, including a no-deal Brexit scenario.
August technical notices
You may remember that on 23 August, a little over a month after May’s statement, the Department for Exiting the EU published 25 ‘technical notices‘. The documents covered such diverse areas, as:
- Applying for EU-funded programmes
- Driving and transport
- Money and Tax
- Importing and exporting
- Regulating medicines
You will find that the notes were supported by guidance entitled “UK government’s preparations for a ‘no deal’ scenario”. Its aim was to put the technical notices in context by explaining the Brexit negotiation’s progress to date, and what might happen if the UK were to crash out of the EU.
September White paper
We then saw in early September, the House of Commons joined the party by publishing a briefing document (white paper) called “What happens if there’s no Brexit deal?” At 172 pages, it’s not exactly a bedtime read. Nevertheless, its fifteen chapters cover all areas from “how could no deal happen?” through to “external relations”, and it is an excellent source of no-deal Brexit information.
HMRC published a letter
But you may not know that, in an unprecedented move, HMRC wrote to 145,000 businesses across the UK about the ramifications of a no-deal Brexit, should Britain crash out of the EU and the Customs union on 29 March 2019. The letter, written by HMRC’s Deputy Chief Executive Jim Harra and published on 17 September, started positively by acknowledging: “The UK government has reached agreement with the EU on the vast majority of withdrawal issues, including the terms of an implementation period. Full agreement on this, will mean that trading with the EU during the implementation period would broadly stay the same until 31 December 2020.” This is meant to give you a degree of reassurance by stating “The approach of continuity does not mean that everything will stay the same, but the priority is maximising stability at the point of departure.”
After referring to the government’s focus “on securing a future partnership with the EU following the end of the implementation period in December 2020”, the letter’s tone changed. Harra referred to a no-deal eventuality being unlikely and continued to reassure readers: “In the event of no-deal, the government is committed to prioritising stability for businesses”. He added that: “we will continue to work closely with industry to ensure that interventions in a no deal scenario are conducted in a way which minimises delays and additional burdens for legitimate trade, while robustly ensuring compliance.” If a disorderly exit was to happen, there would, of course, be immediate changes to the way you, as a business, trade with the EU. Jim’s letter set the position out very clearly: “If we leave the EU without a deal in March 2019, there would be immediate changes to the way UK businesses trade with the EU that impact on your business”.
UK businesses trade with the EU in case of no-deal Brexit
- You, as a UK business, will have to apply customs, excise and VAT procedures to goods traded with the EU, in the same way that already applies for goods traded outside of the EU.
- Trading partners in the EU will have to apply customs, excise and VAT procedures to goods they receive from you, in the same way they do for goods received from outside of the EU.
In particular, if your business currently trades only with the EU, then you’d have to start completing customs declarations from March 2019, and customs checks would apply to your business for the first time.” The letter concludes by saying, “there is no need to contact HMRC at this stage”. However, it suggests, “If you’re a member of a trade body, they might have useful information on their website. VAT advisers, customs agents, freight forwarders and other businesses also have services to help you, to follow customs rules”.
Public domain Brexit sources of information
There are many sources of information on Brexit you can consult, from TV, radio and reading newspapers to searching the web. However, some are more reliable than others. To get a balanced and informed view of what is going on, you would be well inspired to access information from more than one source.
Brexit Government sources of information
- GOV.UK “Brexit” pages – you can sign up to receive regular updates.
- The Government has published technical notices across a range of topics on GOV.UK, to explain what will apply if the UK leaves the EU without a deal, including:
– The House of Commons white paper in early September
– HMRC’s Jim Harra’s “advice and guidance” letter
Lotuswise Chartered Accountants and Business Consultants can support you with the impact Brexit may have on your business and help you succeed. To find out how, please contact us. To also get even more useful business and finance information and tax advice tips, check out our app on Google or Apple stores.