14 minute read
Trading with Europe
OPPORTUNITY KNOCKS FOR
EXPORTERS IN POST-BREXIT WORLD
Wandsworth exporters are adjusting to a new reality following an eleventh-hour Brexit deal struck days before the transition period ended on December 31.
The decision ended months of wrangling over future business rules and fishing rights between the UK and the EU.
Under the terms of the new agreement, import tariffs between the UK and EU have been removed and UK goods can be sold without quotas in the EU market. However, these concessions come at a cost. UK exporters face numerous regulatory hurdles that in all likelihood will make it more expensive and burdensome to do business in Europe. On fisheries, the EU has agreed to give up 25% of its existing quotas in UK waters over a transition period of five and a half years, after which there will be annual renegotiations. Meanwhile, although the UK no longer has access to the EU’s internal energy market, the idea is to have new arrangements in place by April 2022 to ensure that trading via interconnectors – power cables that link the UK with parts of Europe – is smooth and efficient. Adam Marshall, director general of the British Chambers of Commerce (BCC), said: “After four long years of uncertainty and upheaval, businesses will be able to muster little more than a muted and weary cheer. “While firms will welcome the agreement of a new foundation for UK-EU trade, they were faced with the gargantuan task of adapting to new arrangements with scarcely a week before they took effect. “Businesses need to digest the contents of the deal and consider what its provisions mean for the movement of goods, people and data across borders, as well as for their supply chains and partners. “We repeat that it is the responsibility of government to give firms clear, precise and detailed guidance so that they can make the required changes quickly. Far too many details and procedures have been left, literally, to the last minute. “Let’s not forget that many businesses are already on their knees from the impact of the coronavirus crisis, and most will have fewer resources available to implement the necessary changes with furloughed staff.” The BCC said governments on both sides of the UK-EU divide must recognise the impossible task they have set businesses and give them time and breathing space to adjust to new realities. “It is normal for free trade agreements to come with phasing-in measures, and this one should be no different,” said Adam Marshall. “It is now time to bring the political drama of the last four years to an end, and to replace it with pragmatism and determination to make the new UK-EU relationship work. The agreement can and must be a starting point for deeper cooperation as we restart, rebuild and renew our economies. “With greater clarity on the terms of trade, businesses can plan, invest and look once again towards new opportunities.” The UK government continues to update Brexit transition advice for businesses.
For more information visit https://www.gov.uk/transition
Customs Declarations IMPORTANT NOTICE
Now that the UK is no longer in the EU single market or customs union, goods moving between the UK and EU – both imports and exports – will be treated differently. Customs declarations will need to be completed, with immediate effect, for every UK export from the beginning of the year. The requirement for individual customs declarations for imports from the EU has been deferred for six months i.e. until 1 July 2021 though traders will need to keep specific records to then complete a summary declaration. Duty and VAT as appropriate will also need to be accounted for.
Exporters and Importers
LCCI has joined with ChamberCustoms to provide a Customs Declaration service to help exporters and importers to comply with this new requirement for trading with the EU, and indeed with the rest of the world where such declarations will continue to be needed.
A unit of Customs Declaration specialists – Customs agents – headed by Suvjeet Sibia is in place and ready to help the import and export community prepare for this significant change – the number of declarations needed in a typical year will rise from 50 million to over 250 million so many companies are bound to be affected.
DATA
When companies register for the service they will be asked for certain data e.g.
• EORI status and number (economic operator registration and identification) • Goods dealt in; nature and number of consignments; markets served • Whether a deferment account is currently held • Ports used – though note that this service covers every UK port for both import and export.
Visit www.londonchamber.co.uk/export-documents/customs-declarations or contact ssibia@londonchamber.co.uk for further information
Export documents and EU exit - update for Certificate of Origin and ATA Carnet users
• Certificates of Origin
A UK CO (non-preferential) has been designed in accordance with the relevant international convention and has been approved by government lawyers. This will replace the current non-preferential CO and will be issued for shipments after 1 January 2021. Holders of stocks of the old form are being notified on procedures to exchange for a new one. From 1 January only the new form can be issued and used. Non-preferential CO are generally called for as part of the payment mechanism e.g. via a documentary letter of credit or for trade defence reasons, or because the importer is anticipating re-exporting the goods.
• Origin and the UK-EU trade deal
The deal (or UK-EU Trade and Cooperation Agreement – TCA – to give it its full name) includes preferential tariff rates for certain goods provided origin rules are met. The rates are dependent on compliance with origin rules demonstrated by self-certification via a declaration on the invoice which must include a UK EORI number. The statement of origin should appear on an invoice or similar commercial document describing the original product in sufficient detail to enable its identification. The text appears in Annex ORIG-4 of the TCA – page 482 of the document and exporters are advised to consult:
www.gov.uk/government/publications/agreementsreached-between-the-united-kingdom-of-great-britainand-northern-ireland-and-the-european-union
If the goods are not originating and do not comply with the rules of origin in the TCA, no special document is required so in some cases the buyer/importer may call for a nonpreferential certificate of origin which the LCCI can issue as above.
www.londonchamber.co.uk/cofo • EUR documents
A revised version of Movement Certificate EUR (in effect a preferential CO) will be the appropriate document in most cases where the UK has rolled over previous EU free trade agreements. Precisely what countries it can be used for is a changing picture so check this website:
www.gov.uk/guidance/uk-trade-agreements-with-noneu-countries • Arab states
Note that non-preferential CO for exports to Arab League countries will be unaffected and there is no need for the format of the document to change. However, some Arab League states are party to certain EU free trade agreements e.g. Algeria, Egypt, Jordan, Lebanon, Morocco and Tunisia, and a UK EUR document may be appropriate.
www.londonchamber.co.uk/export-documents/eur1movement-certificate • ATA Carnets
ATA Carnets – the passport for goods being temporarily moved cross-border for the purpose of being shown at trade fairs or exhibitions, or for professional equipment and samples – are now able to be used for appropriate temporary shipments to the EU 27. The UK has signed the relevant international conventions both as the UK and en bloc through the EU. LCCI has made the necessary changes to the document for use in the EU.
www.londonchamber.co.uk/export-documents/atacarnet • EU Trade Hub at LCCI
Information and advice on staff employment, business travel, exporting, importing, international trade paperwork, costs, logistics, data protection, e-commerce, accounting and auditing, intellectual property and taxation. Plus, an ongoing series of webinars to help UK companies trade with the EU.
www.londonchamber.co.uk/eu-trade-hub/eu-trade-hub
A third open letter to chamber members, from me, Martin Pocock
Dear Chamber Members,
It is Martin here, owner of Pocock’s Chartered Accountants and Insolvency Advisors. Finally some good news. The government has set a road map out of lockdown. Those businesses that have been forced to close have a re-opening date. Make sure you plan your re-opening; that the business is viable and will provide an income for you and your family.
Grants from Wandsworth Council
Up until your re-opening date make sure you are making use of the available Grants from Wandsworth Council. Graham Russell and his team are doing a great job in distributing the money available to them and we must applaud them. Remember it is your job to claim the grant so check the Wandsworth Council Website to see what you are entitled to claim. If you have any queries regarding your grant, then log into the Chamber virtual meeting at 11.00 a.m. on a Wednesday. Graham or one of his team are available to answer your questions. The Chamber Wednesday morning virtual meeting is a great way to hear what is going on in the local area.
Finance
Be sure that you have applied for the maximum amount you can claim under the bounce back and Cbil loans from your bank. These loans are unsecured provided you are a limited company. Whilst the government has not set out how the loans can be used, make sure these loans are not being secured on your assets and so increasing any amounts owing on a director’s loan account.
Marketing
Now is the time to review your marketing plan. Check and see how COVID-19 has affected your market. Produce a marketing plan that ties in with the reopening of your business. Check that your business is still viable.
Liabilities
Hopefully either you have been able to trade through lockdown or if not are in a position to re-open without have run up too many liabilities. Many businesses will be viable but have run up large liabilities over the lock-down periods meaning that the owner/shareholders will not be able to draw a salary or pay dividends for a long period of time. All you will be doing is paying historic liabilities and potentially running up personal liabilities in order to maintain your family’s standard of living. I want you to know that you can liquidate your business and start again if you need or wish to. I want to warn you against funding a business from your and your family’s personal assets. This is common and once the pattern is set, a chain of events and circumstances can ensue until the business collapses and brings you and your family down with it. It should be obvious if your income from the business is not covering your family’s outgoings, but this is very easy to ignore.
The key factors to look for are: • Extending a loan on a credit card or getting an additional one • Accepting some parental support to ease your personal cashflow • Not repairing the car • Not spending some money on the leaky house roof • Your partner has to find additional work • Trimming or cancelling the family holiday • Difficulty in paying school fees
You should check that your new business will be viable and provide an income for you and your family. If a business does not provide for the standard of living you and your family desire, then you must surely ask yourself why you are doing it. It is easy to believe there are no other options. There are always options. For example, many people go to work for someone else after liquidating their business and find it a welcome relief! It is entirely normal and legal to place a company into a Creditors Voluntary Liquidation, at any time and then start or do something new. If you, and your board do not understand this option and would like to explore this, then please get in touch. My aim here is to protect you, your personal assets and your income going forward. At this early stage I do not charge. Give me a call.
Stay safe and keep well.
Martin
My background
For those of you who do not already know me from the regular chamber meetings, I have spent the last 30 plus years doing this king of work. I qualified as a chartered accountant with PWC and then worked in Australia for several years. I then chose to specialise in distressed situations and am very aware of the pitfalls and challenges which do not occur in the normal course of business. This is a specialised area with very few true specialists! It is akin to sailing along a rocky coastline at night in a storm compared to crossing an ocean. I know where the rocks are and how to steer you round them. I have plenty of testimonials which I can share with you and former clients who you can call should you wish to. I do not think its right to note them here in this very public setting. So, give me a call or catch me on the weekly chamber meeting calls.
In formal language, I specialise in all aspects of corporate finance and insolvency including • Liquidations • Administrations • Creditors Voluntary Liquidations • Company Voluntary Arrangements • • High court winding up petitions • HMRC Time To Pay agreements •
Email: mp@pococksinsolvency.com
More help needed
for business
The British Chambers of Commerce (BCC) has called for more support for cash-strapped businesses as official figures showed that UK GDP slumped by a record 9.9% last year in the wake of the coronavirus pandemic.
Suren Thiru
Although the fourth quarter saw modest growth of 1%, last year’s contraction was the fastest the UK has seen since the 1920s.
Suren Thiru, head of economics at BCC, said: “The UK economy recorded stronger than expected growth in the final quarter of 2020. The squeeze on output from the November lockdown was more than offset by a temporary boost from the release of pent-up demand from the subsequent easing in restrictions, increased activity from the coronavirus testing schemes and Brexit stockpiling. “Despite avoiding a double-dip recession, with output still well below pre-pandemic levels amid confirmation that 2020 was a historically bleak year for the UK economy, there is little to cheer in the latest data.
“Modest growth at the end of 2020 is set to be followed by a substantial fall in output in the first quarter of this year as the current lockdown, the unwinding of Brexit inventories and disruption to UK-EU trade flows combine to suffocate activity. “While the vaccine roll-out offers optimism, with the scarring caused by the pandemic likely to crystallise as government support winds down and the prospect of persistent postBrexit disruption, any recovery may be slower than the Bank of England currently predicts.” Amid this ongoing uncertainty for businesses, the BCC has called on the government to extend and expand business rates relief, prolong VAT deferrals and offer an immediate, further round of upfront cash grant support – at least equivalent to levels of around £25,000 available in the first national lockdown - with sufficient funds to provide for all businesses that need it in every sector.
The organisation also wants Chancellor Rishi Sunak to maintain the Job Retention Scheme until a full reopening of the economy is possible, and expand income support for limited company directors. Suren Thiru said: “The current dripfeed approach to support measures means firms cannot plan for more than a few weeks ahead. It is critical that the government swiftly implements a package of measures that support businesses and the economy for the whole of 2021, including removing the cliff-edges for business rate reliefs, VAT deferrals and furlough.”
The most recent BCC Quarterly Economic Survey of more than 6,000 firms across all sectors found that all key economic indicators remain well below pre-crisis levels, with four in ten firms seeing their cashflow position deteriorate. Nearly one half of firms (43%) reported a decrease in domestic sales, 45% said the volume of their domestic orders had fallen and 38% saw a drop in export sales.
Continued uncertainty around further lockdowns and restrictions, as well as the many unanswered questions on Brexit, have caused businesses considerable distress, with some saying they are worried about the long-term viability of their business.
