Matt Griffith, Director of Policy at Business West, together with an experienced international trade team, will help to provide you with answers to the questions you may have about Brexit.
For instance, you may want to know what new documentation may apply to your business, how to ensure your products aren’t delayed at ports post Brexit or how to conduct a risk assessment.
We will answer as many questions as possible, sharing common themes with you below and through our video series and other Trading Through Brexit content as negotiations unfold. Ask us a question.
See latest FAQs below
Do you anticipate barriers to exporting digital services being introduced post Brexit?
Q: We sell our digital product to companies all over Europe. Do you anticipate barriers or additional hurdles to exporting digital services being introduced post Brexit?’
A: There are no tariffs or taxes on digital products, whether inside the EU or out, so this shouldn’t be an issue. However, one of the biggest issues will be how UK regulations will interact with the EU’s. If the UK and EU diverge on digital regs (e.g. GDPR), you may have to begin conforming to two sets of rules. However it is likely that the UK will mirror European digital regulations (it is the current UK govt. position - and indeed may be necessitated by the final deal). If there is a no-deal then all bets are off, but it is likely that the UK will unilaterally continue to adhere to EU regs - at least until the domestic infrastructure required to do so is in place.
As a service based industry is it worth setting up a wholly owned subsidiary in an EU country to ensure continued frictionless trade?
Q: We are a service based industry and are currently expanding our client base in Europe. Surprisingly given that c70%-80% of the UK economy is service-based, the government has no plans to include the service sector within its proposed future trade arrangement with the EU. Given that we may be facing tariffs in the service sector or potentially worse in the event of a no-deal scenario, would it be a good idea to set up a wholly owned subsidiary in an EU country such as Ireland or The Netherlands to ensure continued frictionless trade?’
A: There are no tariffs on services, whether inside the EU or out, so you should be immune from that. However, you are likely to find it harder in terms of movement of people, business travel, data regulations and ease of legal operation within Europe. How big these issues will be depends on the precise nature of your operations and, naturally, the nature of the final deal. Some European investment banks will offer you advice on whether you need to set up an EU legal operation and the ease of doing this in their country. The European Union has put up this guide showing the routes to do this, which you can find here:
We have been asked for a Brexit Contingency Plan from a supplier and not sure how to answer?
We have been asked for a Brexit Contingency Plan from a supplier. Not sure how to answer, as we are not sure what risks we will face.
That’s a really interesting question and one that naturally involves a number of contingencies. Assessing your vulnerability to the disruption that Brexit might bring is key to forming a contingency plan. The biggest issues for businesses is if they are importing / exporting to the EU and if they are in a sector that is highly regulated by the EU. However, Brexit will of course have consequences that go much further than just those businesses. Do you have a lot of European clients or employ lots of European citizens, for instance? To assess your vulnerability, I would suggest looking at the videos on the ‘Trading Through Brexit’ website (www.tradingthroughbrexit.co.uk), and refer to the Brexit checklist: https://www.businesswest.co.uk/resources/business-brexit-checklist
It is also worth trying to think about why your supplier is asking you to create a contingency plan. For instance, is this simply a tick-box exercise to ‘cover’ themselves? Or, is it more reflective of genuine possibility that this company can move their business outside of the UK? We are hearing of a lot of plans being circulated by companies who just want to ‘tick a box’ at the moment.
Will I still have to pay VAT after Brexit? If so, how will it change?
- Businesses post-Brexit are likely to face increased costs and complexity.
- Businesses will be required to account for VAT on goods exported to the EU at the time those goods cross the border, leading to potentially significant cash flow issues (though the UK government has announced that VAT on imports to the UK from the EU will remain payable at the time of the next quarterly return);
- Neither the customs union nor the European Economic Area (EEA) incorporate EU VAT rules, and as such remaining in either or both of these would not, in itself, solve the issue of cross-border VAT post-Brexit;
- Any post-Brexit simplification introduced is nevertheless unlikely to be unconditional, and may be especially burdensome for small and medium sized businesses which lack the resources to handle additional complexity.
What leaving the EU without a deal on 29 March 2019 would mean for you
The information from your VAT registration shows that:
- You’re a trader based in the UK currently importing and/or exporting goods within the EU
- You do not currently trade with non-EU countries.
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. This includes:
- UK businesses having 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 having to apply customs, excise and VAT procedures to goods they receive from you, in the same way that 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.
What you should do to get ready:
While no changes will be made before 29 March 2019, you may wish to use the coming months to understand more about what leaving the EU without a deal would mean for you. The steps and obligations you may need to take to continue to trade with the EU if the UK leaves without a deal are broadly the same as those that apply to businesses that trade with countries outside of the EU.
You can find information on how to trade with countries outside of the EU on GOV.UK. It covers customs procedures, excise rules and VAT when importing or exporting goods outside the EU.
- Importing from non-EU countries:
- Exporting goods outside the EU:
The government has published a number of technical notices on GOV.UK across a range of topics, including:
- Customs – ‘Trading with the EU if there’s no Brexit deal’
- Tariffs – ‘Classifying your goods in the UK Trade Tariff is there’s no Brexit deal’
- VAT – ‘VAT for businesses if there’s no Brexit deal’
The notices explain the changes that would apply if the UK leaves the EU without a deal on 29 March 2019. On GOV.UK search for ‘EU Exit technical notices’ and select ‘How to prepare if the UK leaves the EU with no deal’.
WTO Tariffs: What import tariffs could be imposed on my exported products if the UK has not negotiated any trade agreements with the EU or other countries?
In the absence of any specific trade agreement, World Trade Organisation rules on tariffs would apply. Read our quick step by step guide to WTO tariffs and most-favoured nations tariffs here:
How will my current EU employees be affected by the end of Freedom of Movement? How should I go about hiring EU nationals after Brexit?
EU nationals living in the UK will have to apply to the EU Settlement Scheme, which will open fully by March 2019. The deadline for applying will be 30 June 2021. If they have lived here for 5 years by December 2021 then they can apply for ‘settled status’, which means they have the right to remain in the UK indefinitely. If they have not been living in the country for 5 years then they will receive ‘pre-settled’ status, which permits them to stay in the country for 5 years, at which point they can apply for settled status if they wish.
Applications will cost £65 for adults and £32.50 for children and be free for EU nationals who already have residency or indefinite leave to remain. Applicants will be asked to provide their biographical information, declare whether they have any criminal records, and upload a facial photograph. The process requires verification of the applicant's identity and nationality using a passport, ID card or other valid document, which can be done using a smartphone app or through secure post.
EU Harmonised Standards: Will the products we import still be acceptable for use in the UK after March 2019?
Question in full:
All of our products are currently imported and are Tested and Certified under Harmonised European standards. Once we leave the EU we may be requested to revert back to British Standards which could effect our current paperwork/certification saying NF / CE.
The Government recently published some guidance on the subject of EU harmonised standards, should there be a no-deal Brexit. The link to the information is here:
What are the implications for exporting food to the EU should the UK leave the EU with no deal?
Government Guidance Documents
Recently the Government has started to produce and update a series of guidance notes for business on different subject areas on how to prepare if the UK leaves the EU with no deal. These can be found at:
There are some general guidance notes on importing and exporting:
There are a couple specifically for the food industry:
- How the labelling of food as well as compositional standards would be affected if the UK leaves the EU with no deal.
Of particular note, a food business in the UK selling pre-packaged food in the EU can currently provide the address of the business in the UK. In a ‘no deal’, the business would need to provide an address for the responsible business or importer into the EU, in one of the remaining EU member states. So some of your companies that have packaged food (Pukka Pies, Soho Coffee or the Muffin Mix producers may need to look into this)
- How producing and processing organic food would be affected if the UK leaves the EU with no deal.
EU Food Legislation
If like many companies you are looking at a “worst case scenario” in the event that the UK leaves the EU with no deal at all and no concessions of any kind.
In this scenario the UK would effectively be like a “Third Country” exporting to the EU. You can use the EU Market Access Database to look at what the requirements are for products imported into the EU from a Third Country. In this example below I have used the example of imports from Canada into France for bacon products with the Tariff Heading 0210191000
There are tabs at the bottom, which you can look at import procedures and documentation requirements; product requirements, taxes (VAT) and EU import duties.
(For import duties you would need to look at the “any country” or “Third Country” rate – as Canada does actually have a trade agreement with the EU).
As all of the products are currently sold in the EU, you can reasonably assume that all the products meet EU legislation in terms of health requirements, additives, banned ingredients etc. However UK companies do not currently have to obtain Export Health Certificates to prove their food products meet EU standards.
Export Health Certificates
The following article gives an overview of the “worst case scenario” regarding Export Health Certificates, if the UK was no deal, or if the UK was unable to secure some kind of concession or interim arrangement.
In order for UK companies to export food of animal origin or containing origin to the EU, the UK would first have to be approved by the EU as an “Approved Third Country”. Producers would have to have their premises approved to become an “EU Approved Establishment”, Export Health Certificates would be required for each consignment – signed off by approved signatories / official vets, and exports would be subject to border controls.
At the moment Export Health Certificates for food of animal origin or containing animal exported outside of the EU are currently issued by the Animal and Plant Health Agency Centre for International Trade in Carlisle.
However as yet there is no published guidance from the APHA or Defra on the plan for issuing EHCs after March 2019 – apart from the fact that work is being done to simplify the processes and recruit more vets.
Is there a simple checklist I can use to help me understand the steps I should take to prepare for Brexit?
Time spent thinking through the changes that Brexit may bring to your firm could yield real dividends in future. While the final settlement between the UK and the European Union is still to be negotiated, there are steps that businesses of all sizes can take now to start planning ahead.
The Chambers provide a simple checklist that you can download and print. This has been prepared in response to the findings from recent surveys, which suggest that a significant number of firms are either watching and waiting – or taking no action at all. We hope you find it useful as a basis for business planning at both operational and Board level. Download it here:
Is there a limit at which customs duties kick in on exports of goods by post /courier?
“Exports” to the EU after Brexit
With regards to your query about the limit at which customs duties kick in on exports of goods by post /courier – the threshold in the EU is 150 Euros. Therefore, in the event of a “no deal Brexit”, your exports with a value under this threshold would enter without any customs duties.
For orders above this amount, in the event that the UK leaves the EU without having negotiated any trade agreements with the European Union, the World Trade Organisation rules on tariffs would apply. The “Most Favoured Nation” or “MFN” rates are the tariffs that countries promise to impose on imports from other members of the World Trade Organisation, unless the country is part of a preferential trade agreement. In effect, MFN rates are the highest (most restrictive) that WTO members charge one another.
To find out the “MFN” rates for your products, you would first need to establish the Tariff Codes for your products, by looking at this website:
Then, once you have the Tariff Codes, you can use the World Trade Organisation website:
We have published a step by step guide to finding MFN rates on the Trading Through Brexit pages of the Business West website:
What preparations are being put in place to allow Britain's incredibly vibrant and cosmopolitan fashion industry to survive Brexit?
The UK fashion industry may be affected in various ways, for instance importing from and exporting to Europe may become more difficult. Doing trade shows across the EU may become more expensive and require additional paperwork. Generally, those companies whose supply chains are spread across Europe may well have to put in place contingency measures such as increased storage capacity for materials to allow for delays at the border. The creative industries generally are importers of European talent, which could be an issue depending on the immigration regime that is in place (current proposals are that only those people earning over £30,000 be allowed in). Additionally, the ‘brand UK’ image may be affected.
It is worth thinking about your imports and whether they come from the EU or via the EU. If you operate in a just-in-time supply chain - as some in the fashion industry do - it may be worth evaluating your supply chain and increasing your storage capacity/ stock to deal with a slowed delivery process. If we get a transition arrangement and a deal with the EU which is comprehensive of goods (which both the UK and EU say they want), then damage to the sector will probably be minimal. However, if the deal does not keep a zero-tariff (i.e. a ‘hard brexit’ or ‘no-deal’) regime on clothing materials then this could be quite damaging. For instance, cotton and apparel goods face quite high external tariffs in the EU. For these reasons a hard/ no-deal brexit could create competitive disadvantage to EU competitors, such as those in France and Italy. I’ve attached a checklist that may help you to assess your vulnerabilities. From there you can begin to think about what contingency measures may be most appropriate (and feel free to get in touch for help on this).