Brexit: Is your business prepared?

The UK is now set to formally leave the European Union at the end of October, unless a deal can be agreed sooner. Although the finishing line has moved, Brexit still has the potential to cause significant disruption.

What do the latest developments mean, and what are the implications for Irish business?

As Brexit approaches, what do you need to know?

Our advice

Following the European Council Meeting on 10 April, the UK has been granted an extension to Article 50 until 31 October. It is not clear that this reduces the risk of a no-deal Brexit.

We advise businesses in Ireland to continue to plan for a hard (no-deal) exit. We believe this continues to be a risk.

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Why do we believe this?

While it is good news for businesses that a no-deal Brexit has been taken off the table for now, there is still no certainty as to the final Brexit outcome. EU leaders at the European Council meeting offered Theresa May a further extension to the Article 50 process, moving the UK departure date to 31 October at the latest.

While we hope that a positive outcome can be agreed in this timeframe, it cannot be taken for granted given the political uncertainties in Westminster.

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What are the options?

  • Hard exit
    Likely. To avoid this option, the UK either has to pass the Withdrawal Agreement and agree on a way forward for the future trade relationship, or revoke Article 50.
  • Withdrawal Agreement is passed
    Unlikely. At the last vote, the gap had narrowed to 58 votes.
  • Revocation of A50
    Possible but unlikely. Parliament could step in and do this but it is the "nuclear" option.
  • Second referendum
    Unlikely.

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What are the implications for business?

Businesses still don't have certainty on the eventual Brexit outcome. It is good news that a hard exit did not occur on 12 April, as it would have had disastrous consequences for business and the economy. However, a no-deal exit remains a possibility.

For firms in the Financial Services sector, a no-deal outcome remains the core assumption governing activation of plans. If a Custom Union was to be agreed between the EU and the UK (watch this short explanation of the EU Customs Union) this would not address the Brexit risks faced by financial services firms arising from the loss of access to the EU Single Market.

Financial Services firms which have readied themselves for no deal will be concerned about what their next steps should be: what will be their new options and requirements for shifting business, operational infrastructure and people between UK and EU-27 entities?

On 1 April, the Irish Government issued important advice for companies who store personal data in the UK. This was followed up by important advice for companies buying goods from the UK.

The extension to 31 October allows a degree of breathing space. We recommend using the available time for regulatory compliance such as customs and VAT authorisations. We would urge trading entities to apply for EORI registration with the Revenue Commissioners. Companies should leverage this extension to advance their preparations. Even if you are well prepared, reassess your plans in the light of the extra time.

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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.

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.

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.

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.

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.

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.

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.

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.

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

Joe Tynan

Partner, PwC Ireland (Republic of)

Tel: +353 1 792 6399

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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