The UK has less than a month before it is due to begin life outside the EU. From 2021, free movement will end and the UK will no longer be in the EU Single Market or Customs Union. Furthermore, this will have a notable impact on businesses, especially companies that employ EU residents or trade with Europe.
Despite this short period, experts have revealed that a troubling amount of UK businesses are not prepared for post-Brexit trade, and that they must act immediately to ensure their future operations.
What is the current situation?
As a final effort to reach a post-Brexit trade deal, Prime Minister Boris Johnson is speaking with European Commission President Ursula von der Leyen on 7 December 2020 in Brussels. There are some topics that are still at the centre of the discussions, such as disputes regarding fishing and business competition rules.
Despite some concerns around the lack of time, the UK Government stated there was “still time to reach an agreement”.
If there is no deal, border checks and taxes will be introduced for goods travelling between the UK and the EU. However, the Government is believed to be concentrating on a ‘Canada-Style’ agreement, meaning that 98 per cent of products are tariff-free, while tariffs on eggs, meat, plus poultry would remain.
Though, the Government has also advised businesses to prepare for an ‘Australia-Style’ agreement, meaning the UK would adopt the World Trade Organisation’s (WTO) rules for trade with the EU, where tariffs can be specific for certain items and some will have none under the UK’s “most favoured nation” rate.
How will tariffs affect my business?
Tariffs are taxes levied on imports and depend on four factors, the value of the goods (HM Revenue and Customs have set out six methods of valuation), the type of goods (their commodity code), where they are judged to have originated, and the country they are being imported.
There are no tariffs on trade solely within the EU customs union. However, unless the UK reaches a free trade deal with the EU, tariffs will apply to UK-EU trade.
Pre-Brexit, the UK’s trade with the rest of the world is subject to EU tariff rates. Post-Brexit, tariffs will depend on preferred trade agreements the UK has negotiated, which could even differ with each country or the UK will adopt the WTO’s rules.
Regardless, businesses will need to consider the implications of their contracts, pricing and purchasing decisions.
Is your business ready for customs?
On 31 December, the UK will become a separate customs territory from the EU, meaning from 1 January 2021, all exports and imports of goods to and from the EU will become subject to customs procedures regardless of whether or not the UK and EU enter into a free trade agreement.
Therefore, it is essential to review your exporting and importing organisations, the effects of new border controls, VAT implications and any EU employee’s needs to ensure you do not need to take any further actions. Form scenario plans to lessen any problems that may arise.
All involved in supply chains will also need to consider the EU border conditions, methods and access to EU or individual Member State’s systems before moving goods.
How Moore Thompson can help
At Moore Thompson, our experts are on hand to protect your business from any further costs and risks that may be acquired due to the UK’s exit from the EU. Additionally, we will also support you by considering the advantages of the opportunities the new trading environment provides.
For more information and advice to ensure you are prepared for post-Brexit, contact our experts at Moore Thompson today.