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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.

While there is still no certainty around what Brexit will mean and planning for it seems impossible, businesses that sell and buy from the EU need to have contingency plans in place which will need to be sufficiently flexible to cope with a variety of possible outcomes. ICAEW’s checklist covers the areas that should be considered, including movement of goods, product compliance, contracts, people, and financial planning (cash flow). These considerations reflect "no deal" being reached in March 2019, but may also be relevant in other scenarios.

Page last updated

8 March 2019

The UK government has been sending instructions to a wide range of businesses, including those that trade with the EU, advising them to take actions to prepare for a situation where the UK leaves the EU with "no deal" on 29 March 2019. 

ICAEW’s Brexit hub contains information on the technical implications of Brexit for the accountancy profession:

In this guide we summarise the key business implications of Brexit. More detailed guidance is available in our framework for preparing your business for Brexit.

Movement of goods

Key areas Key actions
Customs

HMRC has issued instructions to businesses that trade between the UK and the EU-27, or with the rest of the world, to prepare for a no-deal Brexit. HMRC estimates that there are 240,000 UK businesses that trade only with the EU; they would all need to comply with customs formalities in the event of no deal. Grants are available to help with the costs of customs training:

The letters say that importing/exporting businesses need to take these actions:

  • register for a UK Economic Operator Registration and Identification (EORI) number. Businesses that already have an EORI number from another member state (one that does not start GB) can continue using it for now;
  • decide if they want to hire an agent to make import and/or export declarations, or make them themselves by, for example, buying software that interacts with HMRC’s systems;
  • contact the organisation that moves their goods to see if they will need to provide any additional information to them.
  • Get ready to comply with any instructions that may be issued by EU-member states that they export into.
  • Importers to the UK have been advised to register for ‘Transitional Simplified Procedures’ (TSP), which HMRC introduced on 4 February 2019. TSP enables registered importers to defer making customs declarations and paying duty.
  • High volume traders with the EU have been asked to consider moving their goods using the Common Transit Convention (CTC), which they expect to remain in place after Brexit. CTC means that you do not have to pay duty on these goods until they arrive at their final destination. Companies would either need to use an agent to administer CTC for them or make transit declarations themselves using the new Computerised Transit System. HMRC warns that Offices of Destination and Departure are likely to be extremely busy in the event of the UK leaving the EU without a deal. They invite traders to apply for authorised consignor/consignee status allowing them to start and/or end movements from your own premises. To do so companies will need to apply for a Customs Comprehensive Guarantee.
  • There are additional actions for traders of excise goods (alcohol, tobacco and certain oils)
  • Some businesses that already trade outside of the EU have been authorised to use ‘customs facilitations’ to make customs easier. One example are Customs Freight Simplified Procedures. A no-deal Brexit may have implications for their authorisation to use the customs facilitation. If the facilitation has been issued by another EU-member state then they may not be able to use it after March 2019. HMRC advises affected businesses to go to www.gov.uk/hmrc/customs-authorisation-changes or speak to their customs agent, if they have one.

There are also some actions in relation to VAT:

Accounting for import VAT: If the UK leaves the EU without a deal, after 29 March, importers will be able to declare and recover import VAT in their next VAT return, rather than when their goods arrive at the UK border. This is called VAT postponed accounting. To do this they will need to provide their VAT registration number on their customs declaration. From 29 March if the UK leaves the EU without a deal, it will also be possible to use VAT postponed accounting when they import from the rest of the world.

Business have been asked to prepare by:

  • talking to their tax agent about how it may affect their business, and authorising them to use postponed accounting for import VAT on their behalf; and
  • finding out from their software provider how the changes will affect their processes.

VAT registration checks: Businesses that currently use the EU’s VAT number validation service (VIES) to check a customer or supplier’s VAT number, are advised that UK VAT numbers will no longer be part of this service after 29 March 2019.

If they need to check a UK VAT registration after that time, they can use the UK VAT number checker, which will be on GOV.UK from 29 March 2019. Businesses have been asked to consider how these new arrangements affect their business processes, for example IT systems

EU VAT refunds: If the UK leaves the EU without a deal, UK businesses will be able to reclaim VAT from EU countries, using existing processes for businesses based outside the EU.
Business have been advised that if they intend to submit EU VAT refund claims for 2018 using the EU VAT Refund Electronic System, they should submit these before 29 March 2019, instead of the normal deadline of 30 September 2019.

VAT MOSS: Some businesses use the UK’s VAT Mini One Stop Shop (MOSS) to declare sales of digital services to consumers in the EU. They can continue to use the UK’s MOSS portal in the normal way to submit and pay their returns for the first quarter of 2019. This return should include supplies made between 1 Jan 2019 and 11pm on 29 March 2019 (the quarter 1 2019 return). The normal submission deadline of 20 April 2019 will apply. However, they will not be able to use the UK’s MOSS portal to declare VAT on sales of digital services to UK and EU consumers that are made after the UK leaves the EU. If they wish to continue to use MOSS after the UK leaves the EU they will need to register for MOSS in an EU member state. They should do this by 10 April 2019.

ICAEW’s library can help you find information about all aspects of exporting, including government guidance on shipping and logistics which can help your clients decide whether to use the services of a freight forwarder and how to find one.

A range of government guidance has been provided by both the UK government and the European Commission for entities that trade between the UK and the EU-27. Our page on government guidance helps navigate the various publications. In particular you might find useful:

Businesses can sign up to further Brexit notifications from HMRC.

Supply chains

Supply chain mapping is an essential early step in Brexit planning. Knowing where your inputs come from, and what product category they fall into can help you assess the possible tariffs that might apply.

For those who export goods to the EU, for example, you should consider the implications of a worst case scenario. This would be that the UK will leave the EU without any trade deal and all exports and imports to the remaining EU countries will now be subject to tariffs under the rules of the World Trade Organisation (WTO). It is also important to remember that 57% of UK exports go to non-EU countries and might already be subject to tariffs or quotas depending on the arrangements the EU customs union has with the destination country. Some exporters will therefore already be familiar with customs procedures, but extending them to all exports will clearly come at a cost. A more serious problem will be faced by those UK exporters who only export to the EU, for whom applying customs procedures will be entirely new. In the event of "no deal", the transitional and ongoing costs for these businesses could be considerable in the short-term. You can find the WTO and EU third-country rates online.

Keep in mind that for major manufactured inputs you might need to consider where supplies originate.

Further reading