Monday, July 6, 2020

Brexit: easing the transition – Gerry Myton, Partner and Head of Indirect Tax at Streets Chartered Accountants

Gerry Myton, Partner and Head of Indirect Tax at Streets Chartered Accountants, looks at what can be done now to prepare for Brexit, whatever form it may take.

As the uncertainty of Brexit marches on, it is important for SMEs to consider their strategy in approaching any emergent obstacles. In this piece, we will consider the issue of tariffs, the logic of stockpiling and potential measures you can implement to ease the transition.

The trouble with tariffs
There are reports that 80 to 90% of tariffs could be removed in a no-deal scenario. The Government has indicated that some sectors, such as motor, agriculture, and clothing, could retain their protection through import tariffs. If this is the case, then for those whose protection is removed, this could cause significant profitability issues as the margin they make includes that duty advantage over a foreign supplier.

This lack of clarity is also causing confidence problems. For example, to believe that Honda has announced it is ceasing production in Swindon for any reason other than Brexit is somewhat misguided. Risks are also present for other motor manufacturers such as Nissan, Toyota and even the production of BMW’s Mini.

This kind of uncertainty could cause further economic instability but for some, might prove positive: those who import raw materials and re-export goods may find themselves more competitive with reduced needs for certain customs approvals.

Stocking up?
Stockpiling is something we are witnessing and should be considered by businesses who import from, and sell to, the EU27, especially where their imported/exported goods have a positive duty rate after Brexit.

Businesses are stockpiling up to eight week of goods at the moment to prepare. Everyone we have spoken to lately is buying more than they need. Buying without duty however, is not without its downsides: those stockpiling are likely to be eating into their once-healthy cash flows.

Moving forward
There are some matters that can be addressed now and others which can wait, but each business, irrespective of size, needs to have a plan to continue trading with the EU27 in the coming months.

The best advice we can currently give a business that trades to/from Europe is:
1) Get an Economic Operator Registration and Identification (EORI) number
2) Register for the Transitional Simplified Procedures, which reduce the administrative burden at the border
3) Map your supply chain and find your duty hotspot and take advice to determine what mitigation might be available
4) Review your terms of business and the incoterms you trade under.

To mitigate any potential problems it is important to understand your duty position post Brexit. You should assess the various customs authorisations to determine what might assist your business in order to counteract any adverse cash flow problems. Authorisations, such as customs warehousing, inward processing or outward processing, could work depending on individual circumstances. Authorised Economic Operator (AEO) status may work for some too.

At the present time, uncertainty still reigns. The coming weeks may prove decisive in determining the course of Brexit but we have been here before. Until more details are known, we will not be able to predict or look forward with much surety, however there are steps you can take to prepare.

A message from the Editor:

Thank you for reading this story on our news site - please take a moment to read this important message:

As you know, our aim is to bring you, the reader, an editorially led news site and magazine but journalism costs money and we rely on advertising, print and digital revenues to help to support them.

With the Covid-19 lockdown having a major impact on our industry as a whole, the advertising revenues we normally receive, which helps us cover the cost of our journalists and this website, have been drastically affected.

As such we need your help. If you can support our news sites/magazines with either a small donation of even £1, or a subscription to our magazine, which costs just £33.60 per year, (inc p&P and mailed direct to your door) your generosity will help us weather the storm and continue in our quest to deliver quality journalism.

As a subscriber, you will have unlimited access to our web site and magazine. You'll also be offered VIP invitations to our events, preferential rates to all our awards and get access to exclusive newsletters and content.

Just click here to subscribe and in the meantime may I wish you the very best.






Latest news

Broadmarsh retail partnership enters compulsory liquidation

The partnership redeveloping Nottingham's Broadmarsh shopping centre has been wound up. Petitions have also been presented against related companies and these have also entered compulsory...

Staton Young swoop for ‘The Post House’ in Derby

Staton Young Group has purchased ‘The Post House’ on Victoria Street, Derby for an undisclosed sum through FHP. In a record-breaking deal, Staton Young secured a...

East Midlands businesses’ cash generation worryingly low heading into COVID-19 crisis

East Midlands businesses’ cash generation has stayed worryingly low heading into the cash crunch triggered by the COVID-19 pandemic, shows a new study by...

University of Lincoln research predicts digital future for law firm

Students participating in the University of Lincoln’s Graduate Skills Builder programme have recently submitted a report following a market research project to a regional...

Record year continues at GIC

A Lincolnshire packaging machinery manufacturer’s strong start to 2020 has continued this month, with the company sending a record number of machines out of...

Related news

£500k funding boost for Kegworth village centre

Kegworth village centre is set for a major revamp after £500,000 of funding was secured this week by North West Leicestershire District Council (NWLDC). The...

Broadmarsh retail partnership enters compulsory liquidation

The partnership redeveloping Nottingham's Broadmarsh shopping centre has been wound up. Petitions have also been presented against related companies and these have also entered compulsory...

Staton Young swoop for ‘The Post House’ in Derby

Staton Young Group has purchased ‘The Post House’ on Victoria Street, Derby for an undisclosed sum through FHP. In a record-breaking deal, Staton Young secured a...

East Midlands businesses’ cash generation worryingly low heading into COVID-19 crisis

East Midlands businesses’ cash generation has stayed worryingly low heading into the cash crunch triggered by the COVID-19 pandemic, shows a new study by...

By continuing to use the site, you agree to the use of cookies. more information

The cookie settings on this website are set to "allow cookies" to give you the best browsing experience possible. If you continue to use this website without changing your cookie settings or you click "Accept" below then you are consenting to this.

Close