07 Feb Brexit: A time of transition
After more than three years of uncertainty the UK has left the EU. But what does that mean in practice for UK businesses? Are we looking at instant change or is it still ‘business as usual’?
The good news is that the majority of companies probably won’t experience much change in the short term. Until the end of 2020 we are in a transition period and that means that nearly all EU rules continue to apply until that date. In particular, the UK remains part of the EU single market and customs union; with trade and travel arrangements within the EU remaining unchanged. According to a BBC report that accounts for some 49% of external trade, with a further 40% of international trade taking place outside of any EU agreement.
When it comes to trade with countries outside the EU with which the EU does have a trade agreement the position is slightly different. As part of the withdrawal agreement the EU notified all of the countries with which it had trade agreements that the UK should be treated as a member of the EU during the transition period. That notification was a request rather than a legal obligation. Nevertheless the UK has so far negotiated ‘continuity’ agreements with a number of these countries representing some 75% of this external trade, with more negotiations ongoing.
Over the course of this year as negotiations progress the future shape of the UK’s trade with the EU and the rest of the world should start to emerge. In the meantime there are a few practical measures which businesses can take to ensure they are prepared for any future new trading relationships. In a recent article the ICAEW listed a number of suggestions which include areas such as the transport of goods, customs, and VAT.
For example, with effect from the end of 2020, UK businesses will need to have an Economic Operator Registration and Identification Number (EORI) in order to complete import or export documentation. Businesses with an existing EORI starting GB can continue to use the current number, but others may wish to apply sooner rather than later to ensure that the relevant permission is in place before the end of the year.
As negotiations progress, the way in which future agreements are likely to affect different business sectors will become clear. In the meantime business could start to prepare by identifying any potential cross-border impact and ensuring that their systems are able to cope with likely changes.