Whilst the nature of what form Brexit will take remains uncertain, Britain is still scheduled to leave the European Union on March 29th, 2019. Bhavini Kalaria, Founder and Director of The London Law Practice tells businesses what they need to do to prepare for Brexit.
Whatever the outcome of the on-going negotiations, or the stale-mate in Parliament, businesses trading with the EU, or employing staff from any of the EU countries, in receipt of EU funding should take some immediate practical steps to be ready for Brexit.
Complying with HMRC Guidance for a no-deal Brexit.
Businesses are required to:
Firstly, register for a UK Economic Operator Registration and Identification (EORI) number. It’s worth adding that businesses will need this to import or export goods with the EU in a no-deal scenario. So if your business trades in goods you must apply for the EORI as soona s possible. It is a requirement applies to VAT and non-VAT registered businesses equally.
Also, hire an agent to make import and/or export declarations.
Contact any organisation that moves goods to ensure that all safety and security declarations can be made legally.
Step 2: Check contracts where you are trading with businesses or individuals based in the EU.
Where the UK doesn’t negotiate an alignment of regulatory and health & safety standards, then your goods or services will not have the same recognition as they do at the moment. Additional regulatory steps can add costs, and could make what is now a legal transfer of goods or services, into an illegal one. In this scenario, any commercial agreement could be either economically unviable or illegal.
Therefore, your contracts should be examined to see whether there are any provisions which will help you to terminate the contract and, if needs be, re-negotiate. Also, consider whether there are any express provisions dealing with Brexit and what scenarios this covers, and if not whether your force majeure, frustration or material change clauses can be relied on. It’s worth saying, youmay consider bringing the contract to an end if at all possible.
The possibility that a contract can be ended because it is uneconomic is limited and generally will not be a sound reason to trigger a material advance change clause.
Therefore, you should consider taking legal advice if you believe that there is a possibility that your current contractual arrangements could be affected.
Step 3: Check your responsibilities as an employer of EU staff members
A big issue for the Brexit Referendum was immigration – and it is very likely that the freedom of workers to move and stay in the UK without applying for a visa will come to an end. The UK has reached agreements with Norway, Iceland, Liechtenstein and Switzerland. Outside of this we will need to see what negotiations bring.
The Home Office has issued guidance to EU Citizens to apply for a visa under the EU Settlement Scheme. It is advisable to check if staff have the right to stay and work in the UK.
If you are an employer you should consider whether you need to apply for a sponsorship licence to allow you to employ members of staff from the EU. There is no guarantee that your business will be eligible to apply for a sponsorship licence, so early guidance legal advice and Brexit proofing your business now will be vital.
Step 4: Check if your regulator can provide licences and certificates which will be recognised by the EU
Like many issues, it is not clear whether UK regulatory agencies will be able to provide licenses and certificates that will be recognised by the EU for goods and services that are exported to the EU. This depends on whether reciprocal recognitions stays or goes.
Whatever scenario, if your business holds licences to trade or work in the EU – you should look at the licencing requirements now and contact your relevant regulator so you can get keep abreast of the most up to date guidance.
Step 5: Ensure you check the impact on your group structure if you have an office in any of the EU27 countries
Many businesses benefitted from the recognition under the existing regime to be able to set up and operate in any EU country. Freedom of establishment is something which will be affected without any express agreement and if your company operates an office outside of the UK you should see if you will need to either get additional licences, re-incorporate or re-establish back in the UK. This needs special attention if you have staff and need to look at sponsoring them.
There are many other issues which arise out of multiple locations, and you must seek advice on where your business is rightly considered to be located and if there are tax implications. There will also be an impact on current litigation, and the ease with which debt can be recovered.
As well as this, there are many other areas that need to be thought through and certain industries such as food, fishing, pharmaceutical, transport and finance will have specific rules which will apply.
Whatever your unique situation, all businesses are wise to start preparing for any scenario by reviewing their current operations, contracts, people and licences.