Are you Brexit ready?
Brexit will have a huge impact on businesses in the UK.
Many companies have already found that existing contracts or policies with customers, or supply chains - need to be reassessed to account for the upcoming changes. For those who have not fully considered the impact on their business, immediate action is now required. As a company director, it is your duty to “promote the success of the company”. This includes exercising reasonable care and diligence, following legislative changes. With this in mind, it means that company directors must fully prepare for Brexit and its potential effects.
No matter your position on trading with the EU, the best way to get Brexit-ready is to understand the different ways business may be affected. We look into some of the most important things to consider and prepare for as a UK business owner affected by Brexit.
Employment of non-UK nationals
One way that a lot of businesses will be affected by Brexit is through the employment of non-UK nationals. On 1 January 2021, free movement of EU/EEA citizens will end and a new points-based immigration system will replace it. If your business currently employs or plans to employ EU residents, you will need to seek advice and check their legal work statuses.
If you require employees to have certain qualifications, you may need to check whether these will still be valid in the UK.
Changes to imports and exports
One area that a lot of businesses are worried about is the import/export law changes. Goods shipped between the UK and the EU will no longer be classed as “intra-EU movement”. This means that these products may be subject to additional tariffs and other EU custom requirements.
Businesses will soon be subject to a UK-specific tariff called the UK Global Tariff for all imported goods. This tariff aims to replace the EU’s Common External Tariff. However, if you are still selling goods to the EU, this EU tariff may still apply to you. If you trade with the EU, you will also need to regularly check that your business is meeting both UK and EU regulations.
With such big changes coming to import/export regulations, businesses may have to spend a lot of time and money training staff on new processes. A good starting point is to look at the advice on GOV.uk which has step-by-step instructions for preparing to import goods and/or export goods.
New tax regulations
Another significant change to be aware of is that from 1 January 2021, businesses will need to have an EORI number pre-fixed with GB (GB EORI) - to move goods in or out of the UK. If you are a VAT-registered business trading with the EU, you should also consider applying for a new separate EORI number with one of the member countries.
Business contracts with the EU
For those who have contracts referring to the EU or EEA in any way, you may have to review those agreements and update them. If the wording is out of date and not relevant post-Brexit, they may become automatically invalidated in January. In some cases, you may wish to seek legal advice on whether you need to make changes to these agreements.
The impact of Brexit on your sector
Businesses which have sector-specific licenses that are valid in the EU will also have to review these licenses to see whether they will still stand. For example, a license which permits you to operate in the EU won’t automatically apply to the UK once the transition period is over.
Intellectual property protection
The Intellectual Property Office (IPO) will convert almost 1.4 million EU trademarks and 700,000 EU designs to a comparable UK IP system for January. This will provide legal certainty and protect the intellectual property rights of rights-holders in the UK.
If your application for an EU trademark is still pending at the end of the transition period, you will have nine months to apply for the same protections in the UK. Existing international trademarks (protected by the Madrid and Hague systems) will still be protected.
So, are you Brexit-ready?
There are several ways exiting the EU could affect businesses. Therefore, it’s wise to be as informed and prepared as possible before January.
In some cases, you won’t have to change much at all. For businesses which trade with the EU or hire non-UK nationals, you may need to review policies, contracts and tax changes if you haven’t already. Before the end of the year, it's best to review all existing policies and documentation to check for any EU-specific clauses which may be invalid. You may also benefit from specialised legal advice if you think you will need to make a lot of changes.