Deal or No Deal? The Business’ Guide to Brexit
December 23, 2020
At the time of writing, UK and EU negotiators are locked in tense negotiations over the finer points of fishing rights.
On the surface, French access to British waters would seem to have little to do with how Brexit might pan out for -startups on the keys.
But au contraire. From fishing to fin-tech – whether or not the British team secures a deal is bound to affect just about every facet of UK business.
Both sides have refused to rule out a no-deal outcome.
Yet neither will budge on the issue of fishing rights and a few other key sticking points.
The no-deal – or so-called hard Brexit – for which UK businesses are being asked to prepare could fundamentally change the way we do business for good after December 31st 2020.
A last-minute deal would render some of the dire warnings irrelevant. But it’s still likely to change the way we do business, especially with our former trading bloc, the EU.
Without a deal and accompanying free-trade agreement, there is bound to be increased tariffs and taxation, along with further inefficiencies in travel, customs, tax and more.
And whatever agreement is reached will bestow the UK with third-country status to the EU. This will likely slow the movement of people and products across the UK/EU borders, regardless of the outcome.
Here’s what the government has to say about how businesses should prepare:
“Leaving the EU means your business may need to prepare for change.
“Delivering a deal negotiated with the EU remains the government’s top priority. With an implementation period until December 2020, this would give businesses stability, certainty and time to prepare for our new relationship after EU Exit.
“However, the government must plan for every possible outcome, including no deal. Without a deal, businesses may need to take action before the deadline.”
The government has set up an online portal for both individuals and businesses to check how Brexit will affect them.
However, it’s prudent for businesses to carry out their own assessment.
The following guide isn’t an exhaustive checklist. Instead, it’s intended as a starting point for businesses to run with and develop for impact assessments.
Exports and Supply Chain
Whatever happens on January 1st, logistics exports, imports look to be one of the most vulnerable sectors, with inefficiencies, delays and extra costs likely.
Importers and exporters need to understand new customs regulations and the cost implications of any new border tariffs.
If you import or export to the EU, you’ll want to review agent and license schemes. You should also know if suppliers and fulfilment agents store goods in the EU – even if products aren’t EU-manufactured.
Our employment law is a mixed bag of European and UK-specific legislation. You’ll need to know where you stand with EU employees and service providers. You should also be aware of your continuing obligation to European trade unions and plan for any new visa and travel requirements for staff travelling to the EU.
IT and Data
Brexit doesn’t necessarily mean UK businesses are free from the GDPR and other data obligations. And it’s not yet known whether EU servers could levy taxes on cross-border data services. If you host data in an EU country, it could be worth making the switch to a UK provider.
Employees travelling to EU countries could also be hit with steep roaming charges for mobile data and calls.
Covering safety, energy efficiency, quality and more, the scope, breadth and volume of EU standards and regulations is infamously monolithic.
It looks likely that UK manufacturers will continue to comply with existing European standards. Crucially, however, the UK will no longer have a seat at the table to draft new law.
Funding and Finance
If the UK leaves without a deal, it will no longer be part of the MOSS VAT agreement. Businesses selling digital services to the EU will lose access to the portal through which they declare VAT.
You should also review money and financial instruments held within the EU and arrange alternative funding for any EU grants received. Some UK-government funding for businesses s also EU-derived and could dry up.
All Doom and Gloom?
With so many unknowns at play, it’s easy to see Brexit as pure risk. But businesses should also seek opportunities, such as more cost-effective local trading partnerships and a chance to capitalise on volatile currency markets.