A blog by Connor Henderson Connor Value Added Tax (VAT)…
How to ensure Brexit doesn't affect your overseas business relationships
Written by The Brew – partners with Blu Sky
With Brexit still well and truly up in the air, there is significant uncertainty over how this will affect the exportation and importation of goods and services between the UK and Europe in the future.
Will European businesses see Britain as the disserting sibling and shun us? Or will there be enticing new deals that will harvest stronger relationships?
What will change on
29th March 12th April?
12th April is the new deadline to be aware of if Theresa May’s deal is not passed in parliament during week of 25th March. To avoid a no deal Brexit on 12th April, Theresa May will need to come up with a new plan and ask for another extension (which the EU27 had said is possible) and state that the UK will participate in European elections. Having said all of that, there is still a distinct possibility of 29th March being the no deal date as it is enshrined in law as our date of exit. A statutory instrument will need to be introduced week of 25th March to reverse this. The political landscape has been extremely volatile and unpredictable, so ensure you stay up-to-date with developments so that you’re prepared in case the default option of leaving on 29th March is not reversed.
If we leave the EU without a deal then we will experience an immediate break with no agreements in place and no transition period. The government fears this would cause significant disruption to businesses in the short-term.
If Theresa May’s deal is passed in parliament (and assuming there aren’t any caveats such as a ratifying referendum vote), then the UK will stay a member of the EU until 22nd May so all the legislation can be enacted. There’ll be a transition period until 31 December 2020 which should give enough time to get everything in place and prepare for any new post-Brexit agreements. During this time, the UK will strike its own trade deals which will then come into force on 1 January 2021.
Should you be preparing now?
The short answer is yes! While you may not know the specifics of how Brexit may affect your business at this stage, you should assess what could be affected and how you can make initial plans to maximise opportunities and minimise potential challenges.
It’s important to understand the effect on tariffs. If the UK leaves with no deal, the government will set temporary rates which would apply from 11pm on
29 March 2019 12th April and be in place for up to 12 months while new agreements are formulated. Draft documents can be found on the Government website here: https://www.gov.uk/government/publications/temporary-rates-of-customs-duty-on-imports-after-eu-exit . If your goods aren’t listed, they will have a zero-duty rate.
Will you need a visa to travel to EU counterparts?
Under a Brexit deal, EU and UK citizens can continue to travel freely with a passport until the end of the transition period in December 2020. If there is no deal, you’ll need to check https://www.gov.uk/visit-europe-brexit on the rules that will come into effect. After the transition period ends, the European Commission has offered visa-free travel for UK nationals coming to the EU for a short stay, as long as the UK offers the same in return.
Opportunities for meetups!
Business relationships are a lot easier to develop face-to-face so don’t hide away from your European partners. If your European business partners don’t have a convenient location for meetings or working, then consider using The Brew by rent24 who can offer excellent coworking offices in many major European cities. Coworking spaces foster an excellent networking environment too, so you may develop even more relationships while you are there!
Boosting your overseas collaborations
Many businesses are keen to remain in the EU because it makes it easier to move money, people and products around the world. However, some UK exporters have said they’ve had an increase in sales due to the fall in the pound since the 2016 referendum.
At the moment, the lower value pound makes buying in the UK an attractive prospect to overseas businesses. For example, a Chinese company that owns AMC Entertainment bought a British cinema chain, while Qatar has said it would invest more than $6 billion in the British transportation, property and technology sectors.
So, while the pound is still low, assess whether your company would benefit from enticing a potential overseas investor or business. The extra cashflow or partnership before any Brexit transition period is complete could facilitate growth in your business that could offset any potential negative financial issues post-Brexit.
Employing EU citizens
It’s likely you’ll still be able to employ EU citizens after Brexit if they are already living and working in the UK. Under current proposals, EU citizens will have to apply for “settled status” or “pre-settled status” depending on how long they have been in the UK for.
It’s not yet clear what paperwork businesses will have to process, but to help your EU employees feel valued, talk to them: show that you support them and make sure they are aware of the government’s processes. You can direct them to this UK government tool https://www.gov.uk/staying-uk-eu-citizen that helps EU citizens living in the UK find out what they need to do and when.
Recruiting EU citizens after Brexit will be more difficult if they don’t already live in the UK. So, determine whether employing an EU citizen before any transition period ends could benefit your business. For example, an EU employee could help with understanding the culture of an EU business and/or they may have valuable contacts with previous employers and clients.
From the horse’s mouth
For all the latest news on Brexit as it happens, you can subscribe to the Government’s news alerts here.
Preparing for life after Brexit will continue to be difficult due to the lack of experience in this area – after all no country has left the EU before (Greenland doesn’t count as it left the European Economic Community).
Our is advice is to keep planning, identify opportunities where you can and act on them as soon as possible in order to give you the biggest chance of long-term success both within the UK, Europe and beyond.
About The Brew
The Brew has co-working spaces and private offices for teams from 1-100 people in Shoreditch, just three minutes’ walk from Old Street underground station.
We offer free-to-use meeting rooms, a five-star member experience, regular business seminars, events and well-being sessions, a fantastic global network, membership benefits – and lots more!
For further queries, please contact 020 7770 6283.
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Written by The Brew – partners with Blu Sky…