BREXIT - KEY POINTS FOR ACTION
Written for DCCOI by John Magee, Chief Executive Officer of Overseas Results Limited, a global network of leading independent trade consultants.
1. Financial Support
A wide range of mentoring and financial support are available. Ask your LEO for more details.
2. Supply Chain.
Contact your UK suppliers, service providers and logistics companies, or your wholesalers and distributors, to seek assurances about the continuity of goods and services you rely on for trade.
You should also check if your non-UK suppliers use the UK as a landbridge as there may be delays and cost implications after Brexit, such as supply, customs, tariffs and related impacts on working capital.
Obtain an EORI number: If you are a trader who imports or exports goods into or out of the European Union (EU) or trades with the UK post-Brexit, you will need a unique EORI (Economic Operators’ Registration and Identification) number. Register with Revenue for an EORI number to continue trading with the UK after Brexit. This number is valid throughout the EU. You can register for an EORI number through the Revenue website using your Revenue Online Service (ROS) account.
If you trade with the UK, you will have to comply with EU customs obligations after Brexit. Customs declarations will be required to move goods from Ireland to the UK and vice versa. Both “import” and “export” declarations will be required.
In practice, much of the customs requirements can be handled by an agent or operator moving your goods. You will however be responsible for providing your appointed agent with accurate information.
5. Tariffs / Duty
After Brexit, Customs Duty will apply to the import of many goods from the UK into Ireland. Unlike VAT which is recoverable by many businesses Customs Duty is not recoverable and will represent an additional cost of import.
The rate of Duty arising on goods depends on the classification of the particular goods. All goods should have an assigned classification code. Revenue offers more information on classification.
Consider the implications of VAT and Excise Duties on your imports, and Rules of Origin on your exports.
Consider applying to Revenue for a VAT and Duty deferment account. This will allow you to defer the payment of VAT and Duty to the 15th day of the month following the month of import of the goods. The lead in time to obtain Revenue approval for a deferment account can be at least two months. However, Government will introduce a system of postponed accounting for all traders for a period after Brexit so businesses will not have to pay VAT at the point of import of their goods coming from the UK
You need to check whether your current certifications, licences or authorisations will be valid post-Brexit.
If you rely on UK Notified Bodies for conformity assessment certificates, these certificates will no longer be valid after Brexit. You must source an alternative Notified Body in the EU.
To protect your business from financial shocks you could consider hedging; talk to your bank about hedging options. Alternatively you can include a “Currency Fluctuation Clause” into your sales contracts to protect against Euro / Sterling volatility.
8. Working Capital
Brexit will have an impact on your working capital needs. If you are a Microenterprise (employing less than 10 people and with turnover of less than €2 million p.a.) you can also access loans of up to €25,000 from Microfinance Ireland. You can apply through the LEO network, or directly through MicrofinanceIreland.
9. Data Protection
All businesses are advised to review their existing processes and contracts to assess whether they involve Personal Data transfers to the UK (including Northern Ireland).
Options that can be considered may include:
Amending contracts and inserting the model Standard Contractual Clauses (SCCs) - (Article 46 - GDPR). Information on the “model” clauses and a sample set of SCCs (Controller to Processor) can be found on the Data Protection Commission website at: dataprotection.ie/en/media/123.
Review your terms of trade when making your Brexit preparations. Certain terms may expose you to unnecessary risks and costs before the details of a possible agreement and future legislation in the UK are fully known.
It is clear that there will be definitive changes for trade post-Brexit, as the UK will be considered a third country. This means that trade between the EU and UK will now be regarded as import and export. Regardless of the type of agreement reached between the EU and UK following Brexit, a customs declaration will be required for goods traded between them. Such declarations will include details of the sometimes overlooked, yet still important, terms of delivery, or ‘Incoterms’ that have been agreed between the buyer and seller. The terms of delivery you decide to use will have a direct impact on your cost and risk exposure.
Consider where the liability lies when goods are not delivered on time with reference to agreements between buyer and seller. Are you willing to be liable for the customs processes between the EU and UK, bearing in mind that we don’t yet know what they will look like or how much time they will consume?
It is particularly important to reduce the risk in each transaction post-Brexit, and ensure that transactions which were previously intra-EU sales take place under the correct Incoterms in the commercial contract. For example, an EU buyer (importer) would be well advised to avoid purchasing goods ex works (EXW), as they will then be responsible for the UK export declaration. Similarly, an EU seller (exporter) should avoid selling DDP, as they will become responsible for the UK import declaration.