Brexit checklist
The trading relationship between the United Kingdom and the rest of the EU changed when the UK voted to end its participation in the EU’s Single Market and Customs Union. This will mean an end to the free movement of persons, goods and services between the UK and the rest of the EU from 31 December 2020.
The possibility of a no deal Brexit means that UK businesses must ensure they do not lose out as a result of these changes. Economic prosperity and growth remain important aims and familiarity with new processes and actions will now help to drive business success.
This checklist aims to assist in the understanding of the changes affecting Scotland’s businesses and will act as a guide to continuing the already strong relationship with valued European partners. The checklist is not exhaustive but captures the most relevant changes in international trade.
Preparing for change
Businesses should act now to identify what the shifts mean for their operations before making the changes to systems, processes, staffing and potentially business models. Time is short.
Here is a range of low-risk, low-cost actions you can take across ten areas of business operations.
Low-risk, low-cost actions you can take now
WHY?
Businesses should consider both the strategic and tactical implications of Brexit for their operations. While some changes to business processes may be straightforward, others may take time to develop and implement. Time is short – don’t delay.
ACTION
Involve relevant staff to review the potential changes needed across all areas of the business.
There are some actions you can take now (read What does the Brexit transition period mean for my business?) but other actions may need to wait until more is known about the outcome of UK/EU negotiations.
Develop a plan of action and keep it under regular review. Remember to include contingency actions in the event that a UK/EU deal isn’t agreed by 31 December 2020.
Consider the strategic opportunities and risks for your business post-Brexit:
- Are there competitive opportunities you can pursue now that the UK has left the EU?
- How can you access the right skills and talent following the end of free movement of labour within the UK?
- Should you find new markets, strategic alliances, distributors or suppliers?
- Where will your business be in five years’ time, and how can you use this period to develop new momentum?
- Use GOV.UK's transition period checker
WHY?
Brexit will bring to an end the free movement of people between the UK and EU and this may affect your existing workforce (and their families) as well as future recruitment plans.
ACTION
Identify your staff who are non-UK EU citizens or who have close family members who are EU citizens. Retain your staff by helping them register under the EU Settlement Scheme using our guide for employers.
From 1 January 2021 you will need to comply with UK immigration arrangements to employ EU workers. In particular, the ability to recruit lower skilled and seasonal workers may be restricted.
Find guidance on the new immigration system on GOV.UK
Review your recruitment practices to ensure your business can access the right talent in the post-Brexit labour market. The Scottish labour market has become tighter with the recent reduction in net migration and the resulting mismatch in the supply and demand for labour is likely to drive up wage costs. Can you access new sources of labour, perhaps from overseas and from disadvantaged groups with relevant skills but who suffer from underemployment?
Do you employ UK nationals living in the EU/EEA/Switzerland?
Read information for UK nationals living or working in the EU covering residency, education and healthcare. There will also be changes to the mutual recognition of qualifications. UK professionals operating in the EU will need to check the third-country requirements in the host state. EU professionals operating in the UK will need to check with the relevant UK regulator.
TalentScotland runs webinars and tutorials to help Scottish based SMEs understand and navigate the UK Immigration system, including how to recruit talent from the EEA and beyond. Find out more and book your place.
WHY?
Maintain and strengthen relationships with existing customers and suppliers and gain reassurance that both you and they are Brexit-ready. Consider identifying alternative suppliers to help reduce risks to your business.
ACTION
Reassure your EU customers and suppliers that you will continue to deliver their expectations during and after the transition period.
Check that your suppliers are also taking the necessary steps to ensure business continuity after the transition period ends. There will be inevitable changes but showing that you are actively managing any risks and opportunities will increase confidence among your customers and suppliers. In particular, identify if changes to supply chains are needed to meet UK origin requirements and to reduce business risks.
WHY?
The rules for importing and exporting to the EU will change after the transition period. Even if zero tariffs and zero quotas are agreed, UK businesses will still need to complete customs documentation, and importers may need to pay customs duties and VAT. Businesses importing from or exporting to the EU should implement changes to their processes and systems well in advance.
Your EU customers and suppliers may have different interpretations of the rules following the end of the transition period. Avoid any misunderstandings by clarifying processes and responsibilities now.
ACTIONS
Check how to get ready for new rules in 2021 on GOV.UK
Find out about import and export tariffs in the event of no deal
Access information about the open general export licence on the GOV.UK site
4.1 Make sure you have a UK EORI number
You’ll need a UK EORI (Economic Operator Registration and Identification) 12-digit number that starts with 'GB' to continue to move goods in or out of the UK. HMRC has already issued EORI numbers to VAT-registered businesses. If you are not VAT-registered you will need to apply for an EORI number.
An EU EORI number is only required if you are responsible for landing the goods in the EU country of destination and making the customs declaration to the relevant EU customs authority. If your UK business is not responsible for making this declaration to the relevant EU authority, then you will not require an EU EORI.
4.2 Get help with export and customs documentation from your local Chamber of Commerce
Eight Chambers of Commerce in Scotland are licensed by HM Government and HMRC to issue export and import-related documentation and services. Providing expert advice and support, they can answer your questions on export and customs documentation, changes to documentation systems and associated process changes brought about by Brexit.
This service is available to all companies, not just members of the Chambers. To access this support, just call your nearest Chamber. The eight licensed Chambers are:
Aberdeen and Grampian
Glasgow
Edinburgh
Dundee
Renfrewshire
Ayrshire
Inverness
Fife
4.3 Check the rate of tax and duty you’ll need to pay
Look up tariffs, taxes and rules to import goods to the UK
Check duties and customs procedures for exporting goods from the UK
You’ll need to pay excise duties if you’re importing alcohol, tobacco or biofuels.
Find out the rate of excise duty on imports
Businesses holding inventory in the EU may become liable for EU VAT after the transition period. If so, seek professional advice on any tax liabilities and take action now to mitigate against increased business costs and risk.
4.4 Consider changes to contract terms
Knowing the International Terms and Conditions of Service (INCOTERMS) will help you set the right contract terms to reflect potential changes of status (becoming an exporter/importer) following the transition period. Possible changes to pricing and payment policy and INCOTERMS may impact your cashflow and pose a greater risk of non-payment. Your dispute resolution/arbitration clauses may need to be amended (e.g. to the International Chamber of Commerce or trade association)
Find more guidance in our Resources section
4.5 Understand the implications of changes at UK borders
Customs checks at border inspection posts will be needed after the transition period for certain goods including food and drink products, animals and animal products. Take account of the additional costs and delays this will entail.
Exporting animals and animal products in a no-deal Brexit
4.3 Check import conditions for over 100 countries using the Market Access Database
The Market Access Database (MADB) is a free, interactive service providing information about import tariffs and internal taxes to be paid per product and per country.
The database also holds information on customs and import procedures, formalities and requirements as well as the main trade barriers faced by EU exporters abroad.
WHY
If you currently benefit from preferential trade terms under EU free trade agreements (FTAs) with third countries, check the status of the UK’s continuity agreements with third countries.
ACTION
Check the status of the UK’s continuity agreements with third countries
All major FTA partners have informally said they will continue to reciprocate and treat the UK as if it were an EU member during the transition period, so no action is needed immediately.
The UK Government has so far agreed continuity arrangements covering 75% of the UK’s trade with EU FTAs which will take effect after the transition period. However, it will need to agree further continuity arrangements with key markets (such as Japan and Canada) before the end of the transition period to avoid non-preferential trade arrangements being introduced.
During the transition period the UK is also able to negotiate new free trade agreements (FTAs) with third countries outwith the EU. Priority markets for the UK Government include the US, Australia, New Zealand and the Trans-Pacific Partnership countries.
If you are supplying a business in the EU who is exporting to a third country with which there is an agreement, please be aware that EU firms have been encouraged to look for EU only (not UK) content to be able to benefit from lower tariff rates. Clarify your position and consider any mitigating actions.
WHY?
From staff recruitment to customs documentation and changing contract terms, Brexit could bring additional business costs. Stress-test your business so you can anticipate and adapt to changing business costs and potential currency fluctuations.
ACTION
Carry out cashflow projections around broad anticipated cost increases. Speak to your bank in the first instance should you need flexibility for existing borrowing and any new borrowing requirements.
In the event that a UK/EU deal isn’t agreed by the end of the transition period, how would your business manage the resulting cost increases from new import and export tariffs?
Find out about import and export tariffs in the event of no deal
Beyond additional support from your bank, review other finance options available to businesses in Scotland:
Brexit and managing currency risk
Identify the right finance option for your business
Scottish Growth Scheme - microfinance, debt and equity finance options
Business Loans Scotland (BLS) offers business loans from £25,000 to £100,000 and aims to ensure that good, commercially viable proposals do not fail from a lack of access to finance. As a match funder, BLS will fill funding gaps by typically providing up to 50% of the total finance required, up to a maximum of £100,000.
WHY?
During the transition period the UK and EU will negotiate new regulations governing products and services which will come into force after 31 December 2020. If the UK continues to align closely with current EU regulations there will be minimal changes. However, if the UK chooses to diverge from EU regulatory frameworks businesses will need to adapt to comply with new rules. The degree of regulatory alignment with the EU is likely to vary by sector. Either way, businesses may need to obtain new regulatory authorisations, both within the UK and from EU regulators.
ACTION
Identify any regulatory changes for your products or service. Create a key issues document, a timeline of actions and monitor this regularly.
Consider sector-specific impacts, for example: export health certificates for the food sector, REACH for the chemicals and other manufacturing sectors and regulations covering medical devices and clinical trials for the life science sector. Speak to your trade body in Scotland for specialist advice.
WHY?
To understand changes to UK manufactured product marking rules with effect from 1 January 2021.
ACTION
Familiarise yourself with the new UKCA (UK Conformity Assessed) marking, a new UK product quality assurance marking that must be used for goods being sold in Great Britain (England, Wales and Scotland) from 1 January 2021. It covers most goods which previously required the CE marking.
For goods sold in the Northern Irish market the UKCA marking alone will not be sufficient. These goods will also require the CE marking or UK(NI) marking.
Find out whether you should be using NI marking and how by reading the latest guidance
The UKCA marking will not be recognised on the EU market. Products currently requiring a CE marking will still need a CE marking for sale in the EU from 1 January 2021. Find out how to use the CE marking.
This UK Government have produced guidance explaining whether you should be using the new UKCA marking and how to do it. It provides details of the interim arrangements that will be in place a from 1 January 2021 to 1 January 2023 and specific guidance for manufacturing companies in the medical devices, rail interoperability, construction products and civil explosives sectors.
CONTACT
If you have any queries or require further assistance regarding the UKCA mark, please contact goodsregulation@beis.gov.uk.
Arrangements for labelling food-related products will change following the transition period.
Check the labelling and marketing standards for exporting food, plant seeds and manufactured goods
WHY?
Understand the changes to business contracts that will be required after the transition period and take action now to mitigate any risks. It is essential you stay legally compliant and safeguard your data and IP (intellectual property).
ACTION
If your business operates across the EU or exchanges personal data with partners in the EEA, now is the time to consider possible changes to comply with the legislation after the UK leaves the EU. This will help you keep within the regulations and avoid unexpected or unnecessary costs.
Data protection and Brexit on the ICO website
Using and exchanging personal data with other organisations in Europe (no-deal guidance)
Intellectual property and the transition period
The UK Government plans to continue recognition of existing rights in the UK by recreating protections in UK law. This applies both to registered and unregistered rights. They also cover wider mechanisms and arrangements relating to IP, such as cross-border copyright.
You may wish to seek legal advice on how some arrangements could affect your business model or intellectual property rights.
Contracts that were negotiated prior to Brexit may now need to be reviewed. Business contracts may no longer be subject to common EU law, and legal responsibilities around changes in import/export costs as well as relationships with agents and distribution may have to change. Seek professional legal advice.
Check if you need to change how you do accounting and reporting. You may breach reporting requirements in EEA countries if you do not make any changes you need to.
GOV.UK updates on accounting for companies from 1 January 2021
WHY?
New rules will apply to British passport holders travelling to Europe.
ACTION
Ensure that your employees can continue to travel between the UK and EU (plus Switzerland, Norway, Iceland or Liechtenstein). Check that you have at least 6 months left on your UK passport to travel to most countries in Europe (not including Ireland). If you plan to drive in the EU, you may need to get an International Driving Permit.
Read the changes involved in travelling to Europe from 1 January 2021 on GOV.UK
Find more guidance in our Resources section
