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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 post Brexit, to help you prepare for when the transition period has ended.

Page last updated

26 February 2020

While there is still little certainty around what the UK's exit from the European Union on 31 January 2020 will mean means, 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 the UK leaving the EU and the EEA at the end of December 2020.

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 economic consequences of Brexit are unclear and will depend upon the terms of free trade agreements that the UK can negotiate with the EU and other key trading partners. These might not be fully in place by the time the transition period ends UK leaves the EU. 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.

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 by 30 June 2021. The settlement scheme ensures they retain the right to continue to live in the UK. If there is no deal they will need to be living in the UK before it leaves the EU to apply, and the deadline for applying would 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 unless the UK reaches a free trade deal with the EU 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.

Once the transitional period ends on 31 December 2020, goods travelling between the UK and EU will need to pass through customs and customs declarations will need to be completed. The withdrawal agreement says there will be no ‘hard border’, customs checks or controls between Ireland and Northern Ireland.

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 business’s 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. You will need to consider how your contracts and International Terms and Conditions of Service (INCOTERMS) reflect 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

After the transitional period ends on 31 December 2020 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 transition, 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 before the transitional period ends, 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. 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 the transitional period ends by registering in an EU member state.

UK businesses will lose access to the EU VAT refunds system after the transitional period ends so claims should be made before then.

HMRC is introducing new procedures for parcels sent into the UK from abroad. After the transitional period ends 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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