How to prepare your business for Brexit

You may need an export licence to trade with Europe next year

(Image credit: © iStockphotos)

published 27 November 2020

he transition period that began when the UK left the EU on 31 January ends on 31 December, irrespective of whether a trade deal is agreed, with new rules applying from 1 January. These rules are already largely in place, deal or no deal, so it is crucial to prepare for them. An agreement with the EU won’t change the processes through which the UK and the EU will trade from 1 January. At stake are the tariffs that will be payable on imports and exports of goods. Whatever tariffs we end up with, UK businesses will still have to get to grips with a new system as they deal with customers, suppliers and other groups in the EU.

Services-sector companies don’t have to shift goods. But there are still preparations these businesses should make before the end of the year. If your staff have UK professional qualifications that they need to practise – in law, for example – check what you need to do in order for regulators in the EU to recognise these. If your firm is in a regulated industry (financial services, for instance) check what you need to do to stay authorised to operate in the EU.

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The status of your staff is also important. If you employ EU nationals, they need to apply to the EU Settlement Scheme before 30 June next year to be sure they can continue to work in the UK. As for your British staff, check whether any visits to the EU they have to make will in future require visas or work permits. If you want to recruit from overseas from 1 January – from the EU or elsewhere – you need to apply to be a licensed sponsor under our new points-based immigration system.

Manufacturers and other businesses that move goods across the border with the EU – including components and finished products – will need to make many of these preparations. But they must also get to grips with new customs procedures. Everything you import or export will need to be accompanied by the correct paperwork in order to avoid delays. The starting point is that every business trading with the EU will need an Economic Operator Registration Identification (EORI) number. This is the reference that will identify your business within the customs system. Apply via the Gov.uk website if you don’t have this yet.

In addition, you will need to know which “commodity codes” apply to the goods you’re moving. These codes reflect the way in which the customs system classifies your products, defining the processes you follow and, potentially, the tariffs payable, as well as any VAT due. It can be complicated. You must know the exact specification of your products in order to get the right code. With this basic information, you should be able to make the customs declarations required as you import and export. But you also need to check whether your goods are subject to any additional rules. You may have to meet EU standards on labelling, for example, and in certain industries you may need an export licence. In some cases, such as chemicals and pharmaceuticals, you will also need to ensure your products are recognised as complying with EU regulations.

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David Prosser is a regular MoneyWeek columnist, writing on small business and entrepreneurship, as well as pensions and other forms of tax-efficient savings and investments. David has been a financial journalist for almost 30 years, specialising initially in personal finance, and then in broader business coverage. He has worked for national newspaper groups including The Financial Times, The Guardian and Observer, Express Newspapers and, most recently, The Independent, where he served for more than three years as business editor.