Be prepared for Brexit

The UK formally left the European Union at 23:00 on Friday, 31 January 2020. There now follows a period of negotiation to reach a trade deal.

Whatever form Brexit eventually takes, it will cause significant disruption to business operations and trade in Ireland. What are the implications for your business and how can you mitigate the potential risks ahead?

With the UK formally out of the EU, what happens next?

Our advice

Following ratification of the Withdrawal Agreement in the European Parliament, the UK formally withdrew from the EU on 31 January 2020. Now, the next phase of negotiations begins.

The EU and UK negotiators have the unenviable task of agreeing an unprecedented trade deal in months, rather than years. Irish businesses should prepare for varying degrees of a potential hard Brexit in the long-term trade agreement.

The amendment blocking an extension to the transition period means that, should a trade deal not be agreed by 31 December 2020, there is the risk of a "no future economic partnership exit", under which the UK will trade with the EU in the future on WTO terms.

While many organisations have completed their Brexit planning scenarios, it is imperative to consider how the trade agreement may take shape and how any proposed changes will affect your business.

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Why do we believe this?

The Transition Period, which may prove too short for businesses to adequately prepare for the impacts of Brexit. There is a possibility that the timeline is too short to conclude a very comprehensive FTA by the end of 2020. Businesses and other stakeholders should take control and do what they can.

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What are the implications for business?

We advise businesses to consider the detail of the Withdrawal Agreement Bill and, if relevant, how to address the proposed changes it contains as well as the broader consequences brought by the end of the transitional period. The changes will have potentially far-reaching implications for businesses, which we will be exploring over the coming weeks.

Businesses should also keep a firm eye on exchange rate fluctuations. These may continue to fluctuate pending speculation on the terms of any free trade negotiation that may crystalise.

Prepare your business for Brexit with our Day-one checklist.

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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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