Prepare your business for Brexit

In spite of the disruption caused by COVID-19, Brexit remains a real and present concern for business leaders in Ireland.

It has the potential to have significant impacts on business operations and trade already reeling from the effects of the pandemic. How can you mitigate the potential risks ahead, and take the learnings from the recent months and apply them to Brexit?

With the EU and UK negotiating, what happens next?

Our advice

The agreement of the financial settlement and the deadline for agreeing an extension to the transition period are rapidly approaching. It is likely the UK will not ask the EU for that extension by June 30, putting pressure on the parties to agree to the future economic partnership by 31 December. 

If the extension to the transition period is not requested and a trade deal is not agreed by 31 December, there is the risk of a hard Brexit. In that case, the UK will trade with the EU in the future on WTO terms.

With negotiations stalling and Michel Barnier stating that “the UK continues to backtrack on the commitments it has undertaken in the Political Declaration”, Irish businesses should prepare now for a hard Brexit.

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Why do we believe this?

The UK negotiators have said they will not apply to extend the transition period under any circumstances. In that case, there are less than six months to agree a free-trade deal that would include zero quotas or tariffs. This is an aggressive timeline and the first four rounds of negotiations have produced no progress of note. Neither side seems to have an appetite to change its position. The Bank of England governor Andrew Bailey has told banks to step up their plans for the possibility of a no-deal Brexit. We believe you and your business need to act now.

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What are the implications for business?

The impact of a no-deal Brexit would put significant pressure on Irish businesses already reeling from the effect of COVID-19.

Many organisations have completed their Brexit scenario planning, and seen those plans stress-tested by COVID-19. Now, it is imperative to determine exactly how the imposition of WTO trade terms and the associated supply chain, workforce, trade and tariff changes will affect your business. We have seen how disruption and uncertainty have shaped the economy and your business’ outlook in recent months. It is time to take learnings from that experience and build upon the resilience shown during the coronavirus crisis to prepare for what lies ahead.

Read more about Brexit in the new normal and meeting the challenges ahead

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No-risk actions

Whatever form it takes, Brexit will impact your business and we strongly advise you to prepare now. While there is uncertainty around the final outcome of the process, there are a set of no risk actions that you can take now to ensure that your business is Brexit-ready, particularly if you are engaged in cross-border trade.

Registrations and authorisations

Assess which customs and trade registrations, authorisations and reliefs must be put in place. These enable customs clearance and duty payments. They also meet relevant regulatory licensing requirements and secure available duty reliefs. The engagement of a customs agent or broker will help ease the filing of customs declarations.

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Validate your supply chain

To understand the impact of Brexit, companies need to map and confirm their supply chain models. This will illustrate direct and indirect exposure to customs and compliance tariffs and regulations. A challenge for Irish business is the use of the UK as a land bridge, with products moving through the UK en-route to and from Ireland.

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Invest in customs expertise

Irish companies will need to think strategically about customs and trade. On import and export, there will be a need to file customs declarations for all goods imported and exported to or from the UK. Expert customs and trade knowledge will be essential for day to day operational activities. This is also to building a robust customs function to support products crossing international borders.

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Be an Authorised Economic Operator

There has been commentary about "trusted trader" status, and what this could mean for importers and exporters after Brexit. Authorised Economic Operator (AEO) status is a well-established "trusted trader" customs programme. It has been in place in the EU since 2008. After Brexit, AEO could provide for faster customs clearance, providing priority access to companies who have been pre-assessed.

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Assess Brexit-readiness of contracts

Many businesses may find that their current contracts lack provisions to deal with Brexit. For the purposes of customs and trade, and the changing relationship between the UK and the EU, it will be critical to assess all contracts. Focus should be given to determine if the buyer or seller handles fulfilling relevant customs obligations, including the lodging of customs declaration and the payment of customs duties.

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Have enough cash flow and inventory

Import VAT is a duty of customs. A result of Brexit is that it now poses a cashflow challenge for companies trading cross-border with the UK. Import VAT will be charged at the border when importing goods, in both Ireland and the UK. Cash flow problems will increase for companies that need to hold extra inventory as insurance against potential border delays.

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Develop a contingency plan

There is no guarantee that border procedures will operate smoothly immediately after Brexit. Companies need a contingency plan to mitigate against any risk of delay when goods enter or leave the country. Customs reliefs available to reduce customs duty payable should be explored as part of any Brexit planning.

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Check your workforce

Immigration is the one area where a clear picture is emerging. The UK has outlined details of its settlement scheme and temporary residence scheme. Registration for UK citizens will be a big change for employers. Systems and immigration policies will need to be updated. Firms should already have completed an impact assessment on what this could mean for their business.

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Intellectual property

Intellectual property protection—including patents, trademarks, registered designs and copyright—could all change after Brexit. The British government says European patents will still apply in the UK. Yet, the UK is "exploring options" in other IP areas, such as trademarks and designs, because in many cases these will lapse after Brexit.

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Contact us

David McGee

Partner, PwC Ireland (Republic of)

Tel: +353 1 792 8785

Susan Kilty

Partner, PwC Ireland (Republic of)

Tel: +353 1 792 6740

Enda McDonagh

Partner, PwC Ireland (Republic of)

Tel: +353 1 792 8728

Ciarán Kelly

Partner, PwC Ireland (Republic of)

Tel: +353 1 792 6408

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