Getting Business Brexit Ready
How will Brexit affect my business?
|Supply chain||Customs||Tariffs/Duty||Certification, Regulation and Licensing||Currency Movement||Working Capital and Funding||Data Protection||Sectoral information|
Brexit could affect your business in a number of different ways. Under EU law, businesses have different responsibilities depending on where they are situated in the supply chain, (for example, manufacturer, importer, wholesaler distributor, etc.), so you need to anticipate how Brexit will impact your business.
A first step for small businesses is to contact one of the 31 Local Enterprise Offices (LEOs) across the country.
The LEOs can help you navigate your Brexit journey and signpost you to useful Government supports available to help you get your business Brexit ready.
There are many supports available through the LEOs, Enterprise Ireland, InterTradeIreland and Skillnet Ireland, to help businesses examine their Brexit exposure, seek advice, avail of customs training and make plans to protect their business.
- Local Enterprise Offices: Brexit Supports for your Small Business
- InterTradeIreland: Brexit Advisory Service
- Enterprise Ireland: Prepare for Brexit
- Skillnet Ireland: Clear Customs
If you plan to continue to trade with the UK, or your supply chain is partly dependent on the UK, you need to take steps to mitigate the impact of Brexit.
How can I reduce the impact of Brexit on my supply chain?
Ask yourself, do you buy directly from a UK business or do you source your goods or services from the UK, or do you indirectly source products from a wholesaler or distributor? If so, you need to understand the risks of Brexit for your business and you can do this now by checking where your materials, stock, ingredients or any other types of goods are actually coming from or going to.
Supply chain: What can I do now?
- You should contact your UK suppliers, service providers and logistics companies, or your wholesalers and distributors, to seek assurances about the continuity of goods and services you rely on for trade.
- You should also check if your non-UK suppliers use the UK as a landbridge as there may be delays and cost implications after Brexit, such as supply, customs, tariffs and related impacts on working capital.
If you have any doubts about continuity in your supply chain you need to consider the possibility of sourcing your goods or services in Ireland or elsewhere in the EU.
Supply chain: What supports are available to me?
To help you consider these questions or assess the impact of Brexit on your supply chain there are a number of Government supports available:
- The 31 Local Enterprise Offices (LEOs) across the country run a Brexit Mentor Programme to support business owners and managers. This programme can help you to identify key Brexit exposures and develop robust strategies to address issues and maximise potential opportunities.
- InterTradeIreland (ITI) offers up to €2,250 to help you engage professional advice to get Brexit ready and a Brexit Advisory Service to help businesses with practical advice, support and information on Brexit related issues. ITI also offers a follow-up Implementation Voucher to help businesses enact their Brexit plan.
- Enterprise Ireland continues to run a number of Brexit Advisory Clinics across the country offering information and practical support to companies.
- A €300 million Brexit Loan Scheme is open for eligible businesses with up to 499 employees to innovate, change or adapt in response to Brexit-related challenges. Loan amounts range from €25,000 up to €1.5m, for terms of up to three years and a maximum interest rate of 4%. Loans up to €500,000 unsecured. This may be useful for businesses who have Brexit impacts on their cashflow (conditions apply).
If you trade with the UK, you will have to comply with EU customs obligations after Brexit. Customs declarations will be required to move goods from Ireland to the UK and vice versa. Both “import” and “export” declarations will be required.
In practice, much of the customs requirements can be handled by an agent or operator moving your goods. You will however be responsible for providing your appointed agent with accurate information. Incomplete or inaccurate information will lead to delays which could cost you money.
Customs: What can I do now?
- Obtain an EORI number: If you are a trader who imports or exports goods into or out of the European Union (EU) or trades with the UK post-Brexit, you will need a unique EORI (Economic Operators’ Registration and Identification) number. Register with Revenue for an EORI number to continue trading with the UK after Brexit. This number is valid throughout the EU. You can register for an EORI number through the Revenue website using your Revenue Online Service (ROS) account.
- If your business moves goods through the UK, or sources supplies or components from mainland Europe via the UK landbridge, you should consider availing of the ‘Transit’ procedure to lessen customs delays and costs. Transit is a customs procedure that allows goods to be moved across international borders under customs control. A guarantee is required to secure all charges on the goods. For more information visit Revenue’s page on Transit.
- You must have security in place to cover potential or existing customs debt for certain customs procedures or facilities. This security must be in the form of a customs guarantee. A comprehensive guarantee allows you to combine all your current customs bonds and guarantees. You will need an authorisation from Revenue to use a comprehensive guarantee. For more information visit Revenue’s page on Comprehensive Guarantees.
- If you intend to customs clear and import goods in your own name into the UK, or trade online into the UK, you will need to register for a UK EORI number with HMRC (the UK’s Revenue and Customs) and it is likely that you will also be required to VAT register in the UK.
- Consider whether you want to complete customs declarations yourself or use a third party such a customs agent or operator to do so on your behalf. Business should engage with agents/brokers and agree a “pricing schedule” for filing declarations.
- For more detail on key customs concepts, documentation and processes you can access a 40-minute online customs insights course developed by Enterprise Ireland.
- Visit localenterprise.ie for information on the customs workshops run by the Local Enterprise Offices. These one-day interactive workshops aim to provide businesses with a better understanding of the potential impacts, formalities and procedures when trading with the UK post Brexit.
- Visit skillnetireland.ie/clear-customs for information on the Clear Customs training programme run by Skillnet Ireland. This 5-7 day instructor-led programme offers immediate and free customs training to Customs intermediaries, and to businesses who frequently trade with or through the UK.
After Brexit, Customs Duty will apply to the import of many goods from the UK into Ireland. Unlike VAT which is recoverable by many businesses Customs Duty is not recoverable and will represent an additional cost of import.
The rate of Duty arising on goods depends on the classification of the particular goods. All goods should have an assigned classification code.
There are specific rules which apply for valuing the import of goods for Customs purposes.
Rules of Origin are the rules by which customs and other authorities determine the source of an imported product.
In the event of a No-Deal Brexit, standard rate VAT (currently 23% for ROI) will apply to the import of many goods from the UK to Ireland.
In order to mitigate the potential cash-flow burden, the Minister for Finance proposes to introduce a legislative change to introduce a system of postponed accounting whereby importers will not pay import VAT at the point of entry but will instead account for import VAT through their bi monthly VAT return.
Tariffs/Duty: What can I do now?
- Classify the goods that you import or export, and their origin, for customs purposes. Revenue offers more information on classification.
- Consider the implications of VAT and Excise Duties on your imports, and Rules of Origin on your exports.
- Consider applying to Revenue for a VAT and Duty deferment account. This will allow you to defer the payment of VAT and Duty to the 15th day of the month following the month of import of the goods. The lead in time to obtain Revenue approval for a deferment account can be at least two months. However, Government will introduce a system of postponed accounting for all traders for a period after Brexit so businesses will not have to pay VAT at the point of import of their goods coming from the UK.
- Contact your local Chamber of Commerce who have an extensive set of resources to support businesses trading internationally. They develop and maintain Incoterms® rules which are an internationally recognised standard and are used worldwide in international and domestic contracts for the sale of goods. In addition, they provide a range of training courses in International Trade as well as the 2018 ICC Guide to Export Import. For further information see Chambers Ireland.
- Explore the extent to which available customs reliefs such as inward processing relief, Customs warehousing or procedures such as transit could apply to you.
- Review contracts with suppliers and customers and especially Incoterms. Incoterms or trade terms inform parties what to do with respect to the carriage of goods from buyer to seller, and who is responsible for export and import clearance and payment of VAT and Duties. They also explain the division of costs and risks between the parties.
- Assess what changes may be required to your ERP (Enterprise Resource Planning) or finance systems to cater for a changed VAT and Customs Duty accounting regime after Brexit.
For more information, visit Revenue > Brexit.
Certification, Regulation and Licensing
There may be many Brexit implications for your business beyond supply chain and customs impacts.
I import/produce products, components, devices, etc. which require certificates, licenses or authorisations. How will Brexit affect my business?
Certificates, licenses and authorisations are required for trade in the EU for many types of goods such as medical devices and construction products, and for services for instance in the transport sector. If you rely on certificates, licences or authorisations issued by UK authorities or bodies, these may no longer be valid in the EU post-Brexit.
A vast range of certification and licensing for the EU market has to date been conducted by authorities and bodies in the UK. If the UK leaves the EU without a deal, UK bodies may no longer have the authority to issue certificates or licences within the EU.
Certification, Regulation and Licensing: What can I do now?
To avoid disruption and delays, you will need to take the necessary steps to ensure you are compliant with EU rules, that is, to transfer to an EU27-authorised body or authority or obtain new certificates, licences or authorisations issued by a designated EU27 body or authority.
- You need to check whether your current certifications, licences or authorisations will be valid post-Brexit.
- If you rely on UK Notified Bodies for conformity assessment certificates, these certificates will no longer be valid after Brexit. You must source an alternative Notified Body in the EU. This may involve transferring certificates to another member state or obtaining new ones altogether. You can check the EU Commission NANDO website for a list of designated EU Notified Bodies.
- The National Standards Authority of Ireland (NSAI) has prepared useful factsheets that you can consult for further information.
Businesses sourcing products from the UK:
- If your company sources products from the UK post-Brexit, you will no longer be considered a distributor but instead be classified as an importer. In certain instances, this carries additional responsibilities. These may include checking whether your manufacturers have carried out the appropriate assessments, documentation and legal obligations.
Businesses importing chemicals:
- If you plan on importing chemicals from the UK after Brexit, you will need to ensure that the import of these products comply with EU regulations. The Health and Safety Authority (HSA) operates a Chemicals Helpdeskwhich can assist businesses with questions associated with the import of chemical products.
For more information, please see the European Commission Q&A for guidance on industrial products post-Brexit (PDF, 403KB).
Since the Brexit vote, the value of Sterling has depreciated approximately 13% against the Euro and is expected to remain volatile as political and economic uncertainties continue.
Currency exposures for businesses stem not only from the transaction exposure of translating Sterling sales at a weaker rate, but also from reduced competitiveness against now cheaper local UK alternatives.
Estimate potential currency exposure by identifying the extent by which any Sterling denominated revenues are not offset by Sterling costs. In particular, it is important to test the impact of 10-15% currency changes on your costs of inputs, sales prices and profitability.
In order to protect your business from financial shocks you could consider hedging; talk to your bank about hedging options. Hedging is a strategy aimed at minimising or eliminating risk, normally involving positions in two different markets, with one offsetting the other. Derivatives – futures and options – are widely used for hedging purposes because they can protect an investor against changes in the spot value of an underlying asset or currency.
The Department of Business, Enterprise and Innovation has produced a leaflet on Currency Risk Management for SMEs.
Working Capital and Financing
Most of the Brexit impacts set out here will have an impact on your working capital needs. You need ensure that you can access additional liquidity if you need it.
Working Capital and Financing: What can I do now?
- Ensure your business has sufficient liquidity in place, including debt and revolving credit facilities to withstand potential shocks. “Revolving credit” is a credit line for a fixed sum that is automatically renewed once the whole sum (or an agreed portion) has been repaid.
- If you haven’t already done so, consider applying for a working capital loan under the Brexit Loan Scheme. Once you have a sanction in place from one of the participating banks, it will be available for draw down as soon as you need it and remains valid for four months.
- If you are a Microenterprise (employing less than 10 people and with turnover of less than €2 million p.a.) you can also access loans of up to €25,000 from Microfinance Ireland. You can apply through the LEO network, or directly through MicrofinanceIreland.
- Review covenant calculations and headroom to pre-empt breaches as a result of earnings and foreign exchange weakness and engage with lenders. A “covenant” is a clause in a corporate bond agreement in which the issuer makes certain promises designed to protect the bondholder. These could involve commitments on debt-equity levels, dividend payments, cashflow, etc. Sometimes called protective covenant or restrictive covenant.
- Review all relevant cashflow forecasts, consider currency assumptions and whether updating is required.
Brexit will have data protection implications. The UK will become a “third country” for the purposes of the General Data Protection Regulation (EU) 2016/679 (“GDPR”) in the event of a No Deal Brexit and transfers of personal data to the UK from the EU will be subject to the rules on international transfers to third countries provided for in the GDPR and other EU directives and regulations. To date, the EU Commission has stated that the adoption of an accelerated adequacy decision, which would permit transfers of personal data to the UK, is not part of the Commission’s contingency planning.
Data Protection: What can I do now?
In the absence of an ‘adequacy decision’, you should review the data you send to the UK and consider the options available to lawfully transfer personal data to the UK by:
- Amending contracts and inserting the model Standard Contractual Clauses
- Applying for binding corporate rules (“BCRs”) to be adopted for Group transfers
- Considering whether any of the derogations provided in the GDPR apply, for example, explicit consent
- Upgrading Privacy Notices and other documents
For further information, refer to the Data Protection Commission’s website.