6 Steps to Prepare for Brexit
Preparing for Brexit March 2019
Although the final details of Brexit have yet to be agreed, it is widely acknowledged that the UK economy could decline or even dip into recession, post March 2019. Campaigns such as the Red Tractor initiative and ‘Buy British’ could drastically reduce the demand for Irish produced goods, and a ‘Hard Brexit’ introducing physical custom borders will create headaches for many businesses who today trade openly with the UK.
According to Fergal O’Rourke, Managing Partner at PwC Ireland, “Firms need to prepare now for additional costs, border issues, disruption to supply chains and people mobility issues.” PwC Ireland and Silicon Republic have developed some steps that Irish companies should take to prepare for Brexit:
Assess how your organisation will enable customs clearance
Assess which customs and trade registrations, authorisations, and reliefs are required to be put in place to enable customs clearance, duty payments, meeting relevant regulatory licensing requirements and securing available duty reliefs. In addition, engagement of a customs agent will be crucial as there will be a requirement to file customs declarations for all goods imported and/or exported to or from the UK.
Prepare for Brexit by mapping and validating supply chains
Companies need to map and validate their supply chain models in order to understand their direct and indirect exposure. For example, a challenge for Irish business is the use of the UK as a land bridge, with products moving through the UK to and from Ireland. Sourcing products through the UK from countries that the EU currently has a free trade agreement with or storing and distributing non-EU goods such as Chinese- or US-manufactured goods from a UK warehouse, will have significant customs compliance requirements.
Obtain AEO status
There has been commentary about ‘trusted trader’ status, and what this could mean for importers and exporters post-Brexit. Authorised Economic Operator (AEO) status is a well-established ‘trusted trader’ customs programme, in place in the EU since 2008. After Brexit, AEO could provide for faster customs clearance by offering priority access to companies that have been pre-assessed.
Ensure adequate cash flow for VAT and additional inventory
Import VAT is a duty of customs. A result of Brexit is that it now poses a cash flow challenge for companies trading cross-border with the UK. Import VAT will be charged at the border when importing goods, in both Ireland and the UK. Cash flow problems will be compounded for companies that need to hold additional inventory as insurance against potential border delays.
Develop a contingency plan to mitigate against border delays
There is no guarantee that border procedures will operate smoothly immediately after Brexit. Companies need a contingency plan to mitigate against any risk of delay when goods enter or exit the country. Customs reliefs available in certain instances to reduce duty payable should be explored as part of any Brexit planning.
Complete and study the Prepare for Brexit Scorecard by Enterprise Ireland
The Enterprise Ireland Scorecard is an interactive online platform which can be used by all Irish companies to self-assess their exposure to Brexit under six separate sections. The results will highlight where a company could improve their knowledge and will offer links to sites with additional information and potential funding supports.