SECTION
BREXIT
ADVICE
FOR SMES CHANGE IS COMING AND PREPARATION IS KEY “FAILING TO PLAN IS PLANNING TO FAIL” – WHAT DOES BREXIT MEAN FOR YOU AND YOUR BUSINESS?
Linda Harvey, EFM Associate Finance Director: Business Recovery and Turnaround Specialist Supporting Manufacturers and SME’s through challenging times 42
NETWORKS
H
ere at EFM, our team of Finance Directors and Business Advisors often hear SME owners saying; “Brexit doesn’t affect my business... or does it?” From our experience working with vast number of SMEs, one thing we know is whatever shape Brexit takes, it will have an impact on your business regardless small or big – you need to prepare for what is coming and take the necessary steps now. Failing to plan now ahead of January 2021 is planning to fail!
What will be the impact for businesses who trade with Europe?
Currently, 100% of UK-EU trade is tarifffree. As a member of the customs union, UK exporters comply with EU rules that are standardised across the trading bloc. This enables imports and exports to cross borders freely. Should the UK leave without a deal, the majority of exports will face EU tariffs and customs checks – as the UK will be subject to ‘third country’ trading status. This could cause significant shipping delays that affect your goods delivery time, hence think about what “promises” you make to your customers – don’t promise something you cannot deliver! Your cost of product may increase and VAT may be less easy to recover or cost more in certain countries, impacting margins unless you review prices. In addition, there will be changes in how you account for VAT post Brexit and this may vary with different customers (consumers or business), distance selling rules and local EU country VAT registration requirements.
Commodity codes – don’t get this wrong!
After 31st of December, if you want to continue trading cross-border with the EU, then check you know your commodity codes. If applied incorrectly you will end up paying wrong duties! Make sure your finance person in charge is aware of it and factor it into your cost base and the financial forecast should there be any additional costs. Understanding certificate of origin
There are 3 elements that are considered when establishing the right duty rate that must be paid on goods and these are; which country they are being imported to, what type of goods they are and where they have originated from. The last one www.bita.ie might not be as straightforward since there are 2 additional things to consider here; are the goods wholly obtained or produced in a single country? Are your goods made of materials from more than one country? This second option is more complex as there are additional criteria to consider too. Compliance
It is expected that industry specific safety or compliance certification previously under EU umbrella might no longer be valid, this can prove to be time and cost consuming to re-certify locally. The UK has developed its own UK Conformity Assessed mark which may be required, as well as, or instead of the CE mark (e.g. goods bound for Northern Ireland still need the CE mark). Getting
