Although changing daily, we are fast approaching the March Brexit date without an agreement with the European Commission. One thing that remains clear however, is that a pro-active approach to strategic contingency planning is the best way to prepare your business. This approach will place businesses in the best position to take advantage of opportunities in new domestic and overseas markets. In this blog I will look at the key areas I believe are vital to take into consideration to ensure continuity and success for your business.
Get an EORI number
If the UK leaves the EU without a deal, you will need an EORI (Economic Operator Registration and Identification) number to be able to import or export goods to, or from, the EU. This will come into force from 11pm GMT on 29 March 2019. It makes sense to apply for an EORI number now. If you trade internationally you will already have one. For more information and to apply, visit the Government guidance here.
Achieve AEO accreditation
A widespread lack of AEO accreditation (Authorised Economic Operator) across Scotland’s businesses could result in a dramatic reduction in exports to Europe. As a former AEO specialist with HMRC, I would urge companies trading with the EU to address the AEO issue as soon as possible, and develop a plan to ensure they can undertake ‘frictionless’ post-Brexit exporting.
AEO status endows a business with a ‘Trusted Trader’ badge, which is expected to provide a fast track customs process in a post-Brexit EU. The AEO status will help provide frictionless trade with the EU, and will be the benchmark for compliance with customs systems, controls and financial solvency. Exporting without AEO status is likely to become increasingly onerous, costly and unattractive, with the risk that many of Scotland’s businesses will find exports less attractive.
AEO status currently confers fast-tracking of goods at border customs. It can also help reduce costs and delays, with AEO accredited companies likely to enjoy priority treatment. We are concerned at the low awareness of AEO in Scotland, and that application levels for AEO status are negligible. Companies need to start the process now, as there will soon be a bottleneck of applications and delays for a process that currently can take up to a year to complete. AEO authorisation embraces customs simplifications, security and safety or a combination of both, and companies can choose which level is most suitable. Businesses must meet strict criteria set down by HMRC, who require several days on company premises to review procedures and personnel.
In Germany, in 2017 over 6000 companies had AEO accreditation, but in the UK the figure was just 600. We have a long way to go and Scotland’s businesses need a great deal of support from the business community to ensure they become AEO-compliant as soon as possible.
Take advantage of subsidised training
The UK government have released new funding to help businesses prepare for the processes needed to export. HMRC is making up to £8m available to help businesses already involved or intending to become involved in import or export customs declarations. The grants are available on a first come first served basis, with £2m allocated for Staff Training and £3m for IT improvements. Businesses could be entitled to up to 70% towards training on Customs compliance including declarations, clearance procedures and Customs regimes such as warehousing and inward processing, all of which are eligible under the grant scheme. The IT grants are up to a maximum of nearly £180k to help create “ready-made” IT solutions that will help make customs declarations more efficient. Applications will close on 5 April 2019, or earlier once all the funding is allocated, so I would encourage applying for the funds as soon as possible. For more information and to apply, visit the Government guidance here.
What else can you do?
There are many other things that can be done now in order to prepare for Brexit. Key areas that should be reviewed and invested in now include:
- Supply chain analysis
- Customs data tidy-up (in-house systems and controls)
- Customs regimes such as inward/outward processing and Customs warehousing
- Currency risk level
- Contract reviews
- Impact of limited availability of labour from EU
At Campbell Dallas we can support with contingency planning and cost-benefit analysis, including calculation of potential new duty liabilities and assisting with improving all areas of Customs and trade to reduce exposure; helping put in place efficient customs facilitation with the correct level of competence.
Uncertainty is high, specifically for the SME market and we believe that businesses who engage in Brexit planning and future scenario business planning will be better equipped to deal with the new frameworks, regardless of the Brexit outcome.
If you want to discuss any of the points raised in this blog please get in touch with me here, or:
0141 886 6644
The information in this blog should not be regarded as financial advice. This is based on our understanding in January 2019. Laws and tax rules may change in the future.
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