Brexit checklist
New rules for businesses began on 1 January 2021 following the end of the EU transition period. You should act now to prepare your organisation for these changes. The new UK/EU relationship is outlined in the Withdrawal Agreement and the UK-EU Trade and Cooperation Agreement (the “deal”).
The changes are significant and Scottish businesses must ensure that they are ready for the new operating environment. Economic prosperity and jobs 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.
Preparing for change
Now that the UK/EU trade deal has been agreed, businesses should act immediately to identify what the shifts mean for their operations before making the changes to systems, processes, staffing and potentially business models.
Here is a range actions you should now be taking across ten areas of business operations.
Essential actions for Scottish businesses
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.
ACTION
Involve relevant staff to review the potential changes needed across all areas of the business.
We now have clarity about new, post-Brexit rules for businesses and there is now no need to wait to take action.
Develop a plan of action and keep it under regular review.
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?
The rules for importing and exporting to the EU have changed. Although, no tariffs or quotas will apply, UK exporters will still need to complete customs documentation and importers may need to pay customs duties and VAT.
Importers are not currently required to submit customs declarations but can delay making declaration to HMRC up to 30th June 2021. Importers must therefore retain all records for imports since 1st January.
Delaying declarations for EU goods brought into Great Britain
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.
You can find answers to EU Transition related queries and ask new questions on the GOV.UK EU Transition Trader and Industry Forum.
ACTIONS
Get ready to do business from 1 January 2021 on GOV.UK
Import goods into the UK: step by step
Export goods from the UK: step by step
Selling services to the EU, Switzerland, Norway, Iceland and Liechtenstein
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.
Check the rate of tax and duty you’ll need to pay
Check the new rules covering VAT, customs and excise duty for goods from overseas sold directly to customers in the UK. Consignments of goods valued less than £135 will need to pay UK VAT and those valued at over £135 will be liable for VAT and customs duties. There are different rules if you import goods then sell them through an online marketplace.
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.
The UK’s Integrated Tariff Schedule
Prove the origin of goods to benefit from zero tariffs
Check your goods meet the rules of origin to benefit from zero-tariff trade with the EU. To benefit from the zero tariffs and quotas you will need to demonstrate that your goods meet a minimum requirement for content coming from Scotland, the UK or the EU. This must show that a certain minimum percentage of the value of the goods was added in the UK.
Status is proven either by a statement on origin that the product is originating made out by the exporter or the importer’s knowledge. Accredited Chambers of Commerce can also provide ‘certificates of origin’.
Claiming preferential rates of duty between the UK and EU
Rules of origin for goods moving between the UK and EU
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)
What are Incoterms and how can they help my business?
Understand the implications of changes at UK borders
Customs checks at border inspection posts are now needed for certain goods including food and drink products, animals and animal products. Take account of the additional costs and delays this will entail.
Importing and exporting plants and plant products from 1 January 2021
Register with the free Trader Support Service if you trade with Northern Ireland, and the Movement Assistance Scheme for certain trade in agrifood products to Northern Ireland. The Trader Support Service will guide you through the changes for goods movements between Northern Ireland and Great Britain and can also complete declarations on your behalf.
If you import goods into Northern Ireland and want to declare your goods not ‘at risk’ so that EU duty will not be payable on those goods, you’ll need to apply for an authorisation for the UK Trader Scheme.
If you move goods to or from Northern Ireland you need an EORI number that starts with XI.
Moving goods into, out of, or through Northern Ireland
Using CHIEF for declaring goods into or out of Northern Ireland
Export or move live animals and animal products to the EU or Northern Ireland from 1 January 2021
WHY
If you previously benefited from preferential trade terms under EU free trade agreements (FTAs) with third countries, these agreements will no longer apply. New trading arrangements will now be in place.
ACTION
Check the status of the UK’s continuity agreements with third countries
The UK Government has negotiated to “roll over” most of the existing EU trade agreements, which will provide some continuity of trading arrangements for Scottish businesses. However it has not done this for all agreements, and the agreements that have been signed do not necessarily provide the same levels of coverage that Scottish businesses have benefited from as EU members. Businesses should consult UK Government guidance for further information on UK trade arrangements with non-EU 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 the situation will have changed. Clarify your position and consider any mitigating actions.
Find more guidance on existing UK trade agreements with non-EU countries
WHY?
Maintain and strengthen relationships with existing customers and suppliers and gain reassurance that both you and they are prepared to operate after EU exit. 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 after EU exit.
Check that your suppliers are also complying with the new post-Brexit rules. In particular, identify if changes to supply chains are needed to meet new EU-UK rules of origin requirements. Your customers may also have to make changes, such as taking on the formal role of importer or distributor for goods that require CE markings. Showing that you are actively managing any risks and opportunities will increase confidence among your customers and suppliers.
WHY?
From staff recruitment to customs documentation and changing contract terms, Brexit has brought 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.
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?
Brexit has brought to an end to the free movement of people between the UK and EU which 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 employers must comply with UK immigration arrangements to employ EU workers. In particular, the ability to recruit lower skilled and seasonal workers may be restricted.
Under the new UK immigration policy employers now need to have a sponsor licence to hire most workers from outside the UK, excluding Irish citizens. Individual applicants to the UK immigration scheme must meet certain requirements and apply for permission first. The requirements are different for each different type of visa.
UK points-based immigration system: employer information
Recruiting people from outside the UK
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.
Find more guidance in our Resources section
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 have also been 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.
Check that your can still use your professional qualifications when operating in the EU
There have also been 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.
Guidance for legal professionals
The system for recognising EU qualified architects in the UK
WHY?
A trade deal between the EU and the UK has been agreed and 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.
Marking, labelling and marketing standards for imports and exports
Selling services to the EU, Switzerland, Norway, Iceland and Liechtenstein
WHY?
New conformity assessment and product marking rules affecting UK manufactured products came into effect on 1 January 2021.
ACTION
Comply with new rules for product marking. 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. There is a grace period for most products when the CE mark can still be used until 1 January 2022.
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.
The UKCA marking will not be recognised on the EU market. Products previously 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.
Make sure you comply with changing rules around product conformity assessment. Exporters to the EU will either need to apply for a new certificate, issued by an EU Notified Body, or arrange for the transfer of the file and certificate to an EU Notified Body. If businesses self-declare the conformity of their goods against the regulations they can continue to do so, however EU based distributors became ‘importers’ from 1 January 2021. The importer will need to make sure:
- The Declaration of Conformity (DoC) is signed by an EU authorized representative and their details will need to be marked or supplied where this is required by the directives
- The correct conformity assessment procedures have been carried out and that goods have the correct conformity markings
CONTACT
If you have any queries or require further assistance regarding the UKCA mark, please contact goodsregulation@beis.gov.uk.
Check the labelling and marketing standards for exporting food, plant seeds and manufactured goods
WHY?
Understand the changes to business contracts that are now required and take action to mitigate any risks. It is essential you stay legally compliant and safeguard your data and IP (intellectual property).
ACTION
Businesses are advised to take action, including contingency actions, following the end of the transition period on 31 December 2020.
Data
The UK/EU trade deal includes provisions allowing the continued free flow of personal data from the EU, EEA and EFTA States to the UK for up to six months until data adequacy decisions are adopted. The UK has, on a transitional basis, agreed that personal data flows from the UK, EEA and EFTA can continue.
Personal data is any information that can be used to identify a living person, including names, delivery details, IP addresses, or HR data such as payroll details. Most organisations use personal data in their daily operations. This could include, for example, a UK company that receives customer information from an EU company, such as names and addresses, to provide goods or services.
Businesses in all goods and services sectors may be reliant on personal data transfers from the EU/EEA/EFTA – all businesses are advised to check this and prepare accordingly.
Data protection and Brexit on the ICO website
From 1 January 2021
A decision on data adequacy by the EU is expected by 30th June 2021. If a positive decision is granted the free flow of personal data from the EU, EEA and EFTA countries will continue uninterrupted. The EU-UK Trade and Cooperation Agreement contains a bridging mechanism that allows the continued free flow of personal data from the EU/EEA to the UK after Brexit until adequacy decisions come into effect. This will be for up to 6 months.
However, if a positive adequacy decision isn't granted, personal data transfers from EU/EEA to the UK will be affected, and the legal, free flow of personal data from the EU/EEA to the UK will cease. Transfers of personal data from the UK to EU/EEA will not be affected.
To continue to legally receive personal data from the EU/EEA, businesses are advised to take contingency actions. Measures such as standard contractual clauses (SCCs) or other alternative transfer mechanisms can be put in place by businesses to help reduce risk. The ICO also provides more detailed guidance on what actions might be necessary and an interactive tool that allows you to build SCCs.
What do you need to do?
Check the Information Commissioner’s Office (ICO) website. The ICO has published guidance on data protection and Brexit.
- You should check with your service providers whether EU/EEA/EFTA personal data is currently flowing to your business in the UK and put in place arrangements with them (e.g. Standard Contractual Clauses) in the event that a data adequacy decision is not agreed
- You should check whether you receive EU/EEA/EFTA personal data from consumers and businesses who are your customers and ensure this will be legally compliant if a data adequacy decision is not agreed
Further guidance
ICO statement on data protection
DCMS Framework for the Free Flow of Non-Personal Data (Revocation) (EU Exit) Regulations 2021
Intellectual Property Office guidance on supplementary protection certificates from 1 January 2021
Intellectual property
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.
Intellectual property and the transition period
Trade marks
As of 1 January 2021, existing international trade mark registrations designating the EU are no longer valid in the UK. They have been immediately and automatically replaced by UK rights. If you own an existing right, you do not need to do anything at this stage.
More information about changes to international trade mark registrations from 1 January 2021
What do you need to do?
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 now apply to British passport holders working in and travelling to Europe. Business travel includes activities such as travelling for meetings and conferences, providing services (even with a charity), and touring art or music.
ACTION
Business travel in the EU from 1 January 2021
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).
Visit Europe from 1 January 2021: Business travel extra requirements
Read the changes involved in travelling to Europe for business from 1 January 2021 on GOV.UK
Apply for a free UK Global Health Insurance Card (GHIC)
Entry requirements if you are working in a EU country
If you’re travelling to the EU, Switzerland, Norway, Iceland or Liechtenstein for less than 90 days in any 180-day period, you may be able to do some things without getting a visa or work permit, for example going to a business meeting.
You may need a visa, work permit or other documentation if you’re planning to stay for longer than 90 days in any 180-day period, or if you’ll be doing any of the following:
- transferring from the UK branch of a company to a branch in a different country (‘intra-corporate transfer’), even for a short period of time
- carrying out contracts to provide a service to a client in another country in which your employer has no presence
- providing services in another country as a self-employed person
Check the entry requirements and rules of the country you’re visiting to find out if you need a visa or work permit.
Taking goods temporarily out of the UK from 1 January 2021
If you’re taking goods to another country temporarily for business reasons and you think you’ll be over the duty free limit, you can usually get an ATA Carnet to avoid paying duty. This includes things like:
- Samples to show at trade fairs or sales meetings
- Publicity materials
- Recorded film and audio
- Equipment you need for work like laptops, cameras or sound equipment
- Goods for educational, scientific or cultural purposes
- Personal effects and sports goods
If you’re taking a vehicle, get a CPD Carnet instead.
Driving in the EU from 1 January 2021
The Association of British Insurers has issued updated information on insurance for travel into the EU after December 31st 2020.
Access the information on The Association of British Insurers' website
Anyone taking their vehicle to the EU is now required to carry with them, a hard copy of their Green Card — an international certificate of motor insurance — issued by UK insurance providers. This will ensure that the motorist has the necessary third-party motor insurance for the countries in which they are driving.
Green Cards can be provided by your insurer.
Travelling without a Green Card is against the law from 1 January 2021 and if you do so, you will be risking a fine, seizure of your vehicle or prosecution.
Drivers may be required to show documents at the border when entering the EU, but this is a decision for the respective border authorities to take. UK motorists may also be subject to police checks while driving abroad and now need to be able to present the document at the scene if they are involved in an accident.
Find more guidance in our Resources section
