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How to prepare for Brexit – checklist

Read our quick-start guide, outlining a variety of areas that could impact your business, to help you start preparing for Brexit.

Page last updated

1 October 2019

While there is still no certainty around what Brexit will mean, businesses that sell to and buy from the EU need to have contingency plans in place that are sufficiently flexible to cope with a variety of possible outcomes. ICAEW’s checklist covers the areas that should be considered. These considerations reflect "no deal" being reached, but may also be relevant in other scenarios.

10 questions to ask

Where will you get more cash, if you need it?

Assess how much working capital you need. Consider how you would access additional funds, if needed
The consequences of a no deal Brexit are unclear. Nevertheless, it is always prudent for businesses to plan ahead and think about how they would deal with economic uncertainty, which inevitably occurs from time to time. Economic uncertainty might affect sales, the collection of debtors or inventory levels. Businesses may need more cash at hand so they can make sure they continue to make payments on time.

More complex port procedures could mean businesses need to be prepared to carry more inventory, tying up additional working capital. Registering for simplified import procedures, or other customs procedures you may be able to use, could allow you to defer payments of duty and VAT.

What help do you need to access potential new markets?

Consider how you would start activities in new markets, should opportunities arise
The UK government is seeking new trade arrangements with countries outside of the EU/EEA. These trade agreements are largely still in progress. Should they result in improved trade conditions for UK businesses, there may be first mover advantage in accessing these markets. 

Have EU/EEA/Swiss-national employees registered for the settlement scheme?

Ensure employees are aware of the settlement scheme and the need to register
Employees who are EU/EEA/Swiss nationals will need to register for the settlement scheme. They will need to be living in the UK before it leaves the EU to apply. If there is no deal, the deadline for applying will be 31 December 2020.  

How would additional customs duties affect your sales or supply chain?

Understand the different commodity codes of your major imports and exports and the tariff rates that would apply if there is no deal

Tariffs, or customs duties as they are known in the UK, are a tax levied on imports. There are no tariffs on trade wholly within the EU customs union, but if the UK leaves the EU without a deal they will apply to UK-EU trade. Currently the UK’s trade with the rest of the world is subject to EU tariff rates. After the UK leaves the EU, tariffs will depend on trade agreements the UK has negotiated, which can differ from country to country, or on World Trade Organisation (WTO) rules. WTO rules stipulate "most favoured nation" tariff rates, which apply where a preferential tariff has not been negotiated.

Tariffs can be significant for certain items. Equally, some items have zero tariffs under WTO rules. Businesses that only trade with the EU may have no experience of duties. They will need to consider the implications for pricing, purchasing decisions and contracts.

The rate of customs duty (tariffs) depends on three elements: 

  1. the type of goods (their commodity code);
  2. the country they are being imported into; and,
  3. where they are judged to have "originated".

Points to consider include:

  • how you will identify the commodity codes that apply and ensure they’re available in systems that will need to use them;
  • whether "binding tariff information" decisions could help provide certainty for major classes of item. For imports to the UK, these are provided by HMRC;
  • whether a ‘preferential tariff’, "most favoured nation tariff", or "tariff rate quota" applies;
  • the "proof of origin" you will need to provide to be eligible for any preferential tariff; and,
  • the rate of excise duty that applies, in addition to any customs duties, to alcohol, tobacco or certain energy products. 

Are you ready for customs? Have you got your EORI number?

Ensure you have a UK EORI number, if you are a UK business trading with the EU or countries outside the EU. EU businesses will need an EU EORI number to trade with the UK. Consider how you will complete customs documentation.

If there is no deal, goods travelling between the UK and EU will need to pass through customs and customs declarations will need to be completed.

UK businesses need to make sure they have an Economic Operator Registration and Identification number (EORI) starting "GB". They will need this to complete export or import documentation. HMRC sent EORI numbers to VAT registered businesses, in August 2019. If you don’t have one, you can register at gov.uk/eori. EU-27 businesses that only trade within the EU may not have an EU EORI number, they will need to register for one to be able to trade with the UK after Brexit.

The information required for customs declarations can be complex and the forms must be completed online using appropriate software. Businesses will need to consider whether they wish to engage a freight forwarder or customs agent to complete the documentation for them. They should consider how they would find such support, should they need to access it at short notice.

Some businesses may benefit from using the Common Transit Convention (CTC). This simplifies how goods pass through customs and means customs duties only need to be paid when goods reach their final destination. A guarantee has to be put in place to cover customs or import VAT duties while goods are in transit.

Goods imported into the EU from the UK will need to conform with specifications set out in EU regulation. There may be implications for labelling and certification. 

Have you registered for simplified import procedures?

Consider if you could benefit from simplified import procedures. Businesses will need to register to use them. They mean you may not need to settle VAT and duties (if any) on imports immediately at port

ICAEW was pleased to hear that the UK government would be enabling many businesses to defer VAT and duty payments on imports. That will save them having to settle these immediately at port, which will help cash-flow. 

To defer customs duties, excise duties or import VAT businesses will need a duty deferment account. VAT registered businesses do not need a deferment account for import VAT if they’re accounting for it on their VAT Return.

Businesses using a HMRC authorised customs agent to import can use "customs freight simplified procedures".

Business choosing to import without a customs agent may be able to either: 

  • use "transitional simplified procedures", or 
  • get HMRC authorisation to use "customs freight simplified procedures".

Transitional simplified procedures are simple measures to make importing as easy as possible. They enable goods to be transported into the UK without having to make a full customs declaration in advance. Businesses will need to register themselves to use them and will need to have a duty deferment account. Once registered, an agent can make declarations on the businesses behalf.

There are a range of other customs procedures that businesses may be able to benefit from.             

How will your principal contracts be affected by Brexit?

Review your principal contracts to see how they would deal with uncertainty or different trading conditions

It is particularly important that they adequately clarify the terms for trade across EU borders, including how VAT is dealt with. In the event of no deal, you will need to ensure that contracts and International Terms and Conditions of Service reflect that you are now an international exporter or importer.

Do you receive personal data from the EU/EEA?

Review your data flows to identify whether you receive personal data from the EEA, including from suppliers, processors and other group companies

If there is a "no deal" Brexit the EU GDPR will no longer be law in the UK. However, as the UK government intends to write the GDPR into UK law, from all practical perspectives, GDPR will continue to apply.

After Brexit, the UK will be a "third country" until the EU makes an adequacy decision regarding the UK. Until then, the transfer of personal data from the EEA to the UK will only be allowed if ‘appropriate safeguards’ are in place. Such safeguards include Standard Contractual Clauses (SCCs). SCCs must be inserted into contracts (whether controller to controller or controller to processor) before Brexit, and their wording must follow that approved by the European Commission.

Transfers of personal data to the EU/ EEA from the UK will not be affected and transfers to and from countries outside of the EU/EEA will be subject to the same rules as now. 

Do you know how changes to VAT will affect you?

Consider how you will register for MOSS for online sales in the EU-27. Claim refunds on sales into the EU before the Brexit date. Know that anyone sending a parcel valued at £135 or less into the UK from abroad will need to register in HMRC’s new digital service and account for VAT due

The "mini one stop shop" (MOSS) allows businesses that sell digital services to consumers in EU member states to report and pay VAT via a single return and payment. UK businesses can continue to use the system after Brexit by registering in an EU member state. They will not be able to do this until after Brexit.

UK businesses will lose access to the EU VAT refunds system after Brexit so claims should be made before this date.

HMRC is introducing new procedures for parcels sent into the UK from abroad. After Brexit these procedures will apply to parcels sent from the EU. For parcels with a value of less than £135 the business sending the parcel will need to register with HMRC’s digital system and settle any VAT and duties due online. 

Do your corporate reports reflect Brexit risk?

Having evaluated Brexit related risks for your business, consider how they might impact on your reporting. You should consider how uncertainty affects judgements and estimates, going concern and, for businesses that prepare them, viability statements

The directors’ report and strategic report are an opportunity to communicate how the board is taking account of the challenges and opportunities of Brexit. Readers may find disclosures more useful where they distinguish specific, direct challenges to the business model and operations from the effects of broader economic uncertainties.

Uncertainty will mean businesses need to pay particular attention to judgments and estimates, in particular when assessing assets for possible impairment. 

ICAEW members: how to prepare for a no deal  Brexit

The business checklist above outlines the business implications of Brexit. ICAEW’s Brexit hub also contains information on the technical implications of Brexit for the accountancy profession. ICAEW members should familiarise themselves with all that apply to their situation: 

There are also UK government technical notices on accounting and audit if there is no Brexit deal. Although these notices deal with a narrower range of issues than our practical guides above, they outline the legal implications of Brexit for accounting and audit:

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