Brexit: Be prepared for disruption

30 October 2019: Whatever form Brexit eventually takes, it will cause significant disruption to business operations and trade in general.

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

With Brexit negotiations now in limbo, what should you do now?

Our advice

MPs in the UK moved the Withdrawal Agreement Bill to its next stage in Parliament, but refused to agree to Prime Minister Johnson's three-day timetable for debate of the Bill's content. The PM has now paused the legislative process and has called for a general election on 12 December.

EU members have agreed to accept the UK's request for a further Brexit delay, postponing the country's departure from the European Union until 31 January, 2020. The delay is termed a 'flextension', meaning the UK could leave sooner than that date if a deal is ratified.

Irrespective of the upcoming events in London and Brussels, change is coming for Irish businesses. While many have completed no-deal planning scenarios, there is an opportunity to consider the draft deal and how to address the proposed changes in customs and VAT arrangements.

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Why do we believe this?

While it is good news for businesses that no deal has been averted for now, there is still no certainty as to the final Brexit outcome. A deal in principle has been agreed, but any EU-UK Brexit withdrawal agreement needs the official backing of both the UK and European Parliaments. However, we cannot take for granted that the agreement as tabled will pass through either parliament. There is also the matter of the 'Transition Period', which may prove too short for businesses to adequately prepare for the impacts of Brexit.

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What are the options?

  • Extension
    Agreed. The EU 27 has agreed to a 'flextension', meaning the UK could leave sooner than 31 January 2020 if a deal is ratified. A general election in the UK will be held during that period.
  • Withdrawal Agreement Bill approved
    Possible, but will take an estimated four to eight weeks to debate. The newly presented Withdrawal Agreement needs to be agreed by the European Parliament as well as the UK Parliament.
  • Revocation of Article 50
  • Second referendum

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What are the implications for business?

We advise businesses to consider the details of the draft withdrawal agreement and, if relevant, how to address the proposed changes in customs and VAT arrangements it contains. The changes will have potentially far-reaching implications for businesses, which we will be exploring over the coming weeks.

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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