< Previous20 East Midlands Business Link www.eastmidlandsbusinesslink.co.uk TAX Trading with the European Union post 31 December 2020 By Gerry Myton, Indirect Tax Partner at Streets Myton Mulholland Tax Advisory LLP, the specialist tax advisory arm of Streets Chartered Accountants. T he UK ceased to be a member of the European Union (EU27) on 31 January 2020. In the early part of February 2020, the UK Government began to set out the trading landscape post 31 December 2020. There will be no frictionless trade with the EU after the end of the transition period. Customs declarations and checks that currently only apply to trade with non-EU countries will become the norm for goods moving between the EU27 and the UK. In recent speeches and interviews, senior UK Government ministers have confirmed that “the UK will be outside the single market and outside the customs union, so we will have to be ready for the customs procedures and regulatory checks that will inevitably follow.” What does that mean? * Full import controls will apply to goods arriving in the UK post 31 December 2020. * Transitional Simplified Procedures (TSP) will be withdrawn. Anyone authorised to use TSP will need to hold the appropriate authorisations. * The proposed special arrangements for exports/imports at roll on roll off (RoRo) ferry locations will not apply. Therefore, import declarations or transit movements must be presented on arrival to a Customs Office or via a Port Inventory System. For exports, goods will need to be presented on exit of the UK as happens for exports to non- EU countries. * EMCS (Excise Movement and Control System) movements will start at the port of import and not within 24 hours as was proposed. * The proposed VAT Postponed Accounting has also been shelved. VAT will be due on imports at the point of importation (cash on the table) subject to the use of deferment accounts and financial guarantees being in place. * The ‘Brexit Tariff’ with 88% of goods being imported free from customs duties, has been withdrawn. Instead the Department for International Trade is consulting on the future tariff and potential removing nuisance tariffs (those under 2.5%) and rationalising others but at the same time protecting indigenous industries, promoting inward manufacturing while not undermining any negotiated free trade agreements. How does a UK business mitigate these changes? You will need to: * review terms of trade with EU27 customers/suppliers. * consider how declarations will be made and who will make these declarations. There will be a rush to secure valuable customs agent’s resource in autumn 2020. * review which HMRC regimes could mitigate exposure to the above, such as AEO, warehousing, IP, OP and CFSP. * consider Transit authorised consignor and consignee status to start and finish transit movements at your own premises. * consider Temporary Storage authorisations to receive goods inland. It is worth noting that the EU27 never promised any simplified procedures to importers or exporters, so the UK is mirroring this, but businesses in the UK now have less time to get prepared! UK businesses need to move quickly to ensure they can continue to operate their supply chains as smoothly as possible. Northern Ireland The great unknown is what will happen on freight movements between mainland UK and Northern Ireland to ensure goods can move freely between Northern & Southern Ireland, and how the Irish Protocol will be managed and policed. There does seem to be divergence between the UK and EU27 over what the words mean with the UK insisting that there will be no border between Great Britain and Northern Ireland. That is not my reading of the protocol! 20-21.qxp_Layout 1 02/04/2020 14:16 Page 120-21.qxp_Layout 1 02/04/2020 14:16 Page 222 East Midlands Business Link www.eastmidlandsbusinesslink.co.uk FACTORY AUTOMATION D evelopments within Industry 4.0 and the Internet of Things (IoT) continue to drive forward factory automation, both in larger and smaller operations, with a plethora of new applications and products promising to bolster efficiency, productivity and product quality, making automation essential in improving production processes. There are a range of technologies and robots that enhance automation, and computing and software advances have made automation easier to incorporate. While the UK has been slow to adapt to technological innovation, with a reduced workforce set to hit factory operations across industries, thanks to Brexit and new immigration rules alongside an already dearth worker pool and skill shortage, automation has been highlighted as the primary method in which to make up for the lack of bodies. Intelligent software, sensors, machine vision systems, robots, Automated Guided Vehicles (AGVs), Artificial Intelligence (AI) and Virtual Reality (VR) are amongst the variety of solutions that can be implemented to heighten automation. The common-stated benefits of modern automation, or creating a ‘smart factory’, are wide ranging, from reducing operating and labour costs to streamlining production, minimising manufacturing time, and eliminating error and product variability. Automation can also improve safety in factories, taking employees away from hazardous tasks or heavy lifting and handling. Furthermore, robots can complete tasks repetitively, with high levels of precision for longer periods of time than humans, with less breaks and no fatigue. The future of factories involves Forward thinking factories With the connection opportunities of IoT, sensors, the wealth of new technologies available and the declining price of robotics, heightened factory automation is on the horizon. 24 Á 22-25.qxp_Layout 1 02/04/2020 14:21 Page 1www.eastmidlandsbusinesslink.co.uk East Midlands Business Link 23 FACTORY AUTOMATION © Shutterstock /Ico Maker 22-25.qxp_Layout 1 02/04/2020 14:21 Page 224 East Midlands Business Link www.eastmidlandsbusinesslink.co.uk FACTORY AUTOMATION end-to-end automated and flexible manufacturing, and this latter aspect will only become more important as personalised and customised manufacturing skyrockets. Across these automated factories, retrieval, assembly and quality control can be completed by autonomous robots in a digitised system from which rich data can be collected and monitored by supervisors for optimisation, to increase output and reduce any defects. With many factories embracing the IoT, processes are being designed with sensors connected to the cloud. Data transmitted from these sensors is allowing machines to polish processes, including when active. Further, big data processing and analytics analyse this information and real time analysis can present vital insight into the performance of various aspects of production. The growth of automation, connected machinery and use of data is set to be boosted as 5G and advanced Wi-Fi replace cables. 5G will enable quicker downloads, and permit sensors to become more responsive, heightening real time reactions. Meanwhile, set to push machines further, machine learning is allowing machines to learn what they have not been directly programmed to do. Using algorithms and finding pattens in data, machines do not need to be programmed to enact tasks repeatedly and can identify and adjust errors in processes. Machine learning is also proving useful to make sense of big data, such as that gathered by sensors on the condition of machines in a factory. There are two key types of machine learning: supervised and unsupervised learning. The latter delves into collected data to identify patterns and is often used for predictive maintenance in factories, by learning the algorithms and data behind faults in systems and using this to pinpoint problems prior to their fruition. The automation of factory maintenance through predictive maintenance programmes, according to an Accountancy UK report, has been adopted by 8 in 10 British companies. Designed to help manufacturers discover the condition of equipment and machinery, to see when maintenance is required and detect problems before they occur, primarily through sensor data analysed by AI, predictive maintenance can prevent downtime resulting from malfunctions and breakdowns and associated unexpected costs that can severely impact the bottom line. In these programmes, engineers can be sent alerts upon the discovery of something out of the ordinary and manufacturers given time to order replacement parts prior to breakdowns. This sensor data collected for predictive maintenance can also improve productivity generally by expanding equipment life, decreasing health and safety hazards from faulty equipment and can indicate what machines are utilising exorbitant amounts of energy to make energy bill savings. Plug and play technology is often used to facilitate predictive maintenance and monitoring in factories containing legacy equipment that were not created to feature connectivity capabilities and are unable to constantly send data. With plug and play devices, current factory technology does not have to be ripped out and replaced, a major expense, and can begin immediately monitoring a machine’s condition. VR and augmented reality (AR) are also growing in importance in increasingly automated factories, adopted to bolster safety and productivity. VR can improve manufacturers’ predictive analytics plans. By interacting digitally with a product, design flaws can be spotted quickly and by using a virtual environment to investigate the production process, one can uncover bottlenecks, and where improvements need to be made. In 22-25.qxp_Layout 1 02/04/2020 14:21 Page 3www.eastmidlandsbusinesslink.co.uk East Midlands Business Link 25 FACTORY AUTOMATION illustrating the production process digitally, one can also boost safety by uncovering any dangerous aspects. VR can also be utilised to see a model of a product to remove the need for prototyping and can be used in maintenance to present technicians with the information they require by projecting it onto a part in need of fixing. Ever increasing in popularity, AGVs and cobots are cost-effective forms of automation which have changed how factories integrate robotic technology. Cobots, which usually recoup their cost in a year, are relieving burdens from employees and interacting with them safely, using sensors to work alongside humans and avoid collisions. Advances in vision and sensor systems, which could speed up cobots, as well as dropping prices and the growth of robot leasing programmes, which reduce the costs of automation, are to push forward cobot use, alongside the known ease of their installation, programming and operation. AI algorithms and deep learning can support cobot use by optimising their performance, preventing faults and, as with other devices, enabling their preventative maintenance. AGVs meanwhile also work side by side with employees, with smart sensors, vision cameras and laser scanners, acting as flexible transport systems, moving around materials and components to support production lines. Connected to the IoT, software can be used by managers to monitor AGV traffic, and if a slowdown occurs, they can identify the cause and rectify the issue, such as an obstruction. AI has enhanced the development of robots overall, creating more complex, intelligent and skilled options - rather than fixed machines - which improve with each task. Neuromorphic processors have been highlighted as important to the next wave of robots, which will be trained to use pools of data and taught to think for themselves. Generally, robots continue to become more flexible, have gained a better range of motion and can now function with greater speed and precision. Advanced robots, equipped with machine vision and machine learning systems can also easily adapt to variance, to ensure proper assembly. Not only useful in transporting items, assisting humans and assembling products, automated systems can also take over quality control tasks, that are limited by human error. Machine vision can scan for imperfections, including many not visible to human eyes. Able to identify flaws instantaneously, factories can adapt quickly. The idea of implementing full automation, or even one day desiring to achieve lights out automation, can seem intimidating as a result of costs and the potential disruption of creating a new factory. However, this extensive, full automation is not always required for factories seeking to boost efficiency and productivity to meet customer demand. Factory automation can be scaled up gradually as operations require, perhaps following a process review. For instance, AGVs and cobots can be smoothly integrated with ERP systems and replace simple mundane tasks, so that workers can be retrained and complete value- added jobs. The real time data that one can collect from these bots also allows insight into whether further investment in automation is desired. Currently, the UK is behind in automation integration, offering lower capital investment into automation and holding a below average robot density in comparison to Europe, but change can be seen on the horizon, as factories gradually embrace the connection opportunities of IoT, sensors, the assistance of cheaper cobots and seek an alternative to human staff as a lack of factory workers only becomes more concerning. © Shutterstock /Zapp2Photo 22-25.qxp_Layout 1 02/04/2020 14:21 Page 426 East Midlands Business Link www.eastmidlandsbusinesslink.co.uk HEALTHCARE © Shutterstock /Andrey_Popov Stopping 26-28.qxp_Layout 1 02/04/2020 14:28 Page 1www.eastmidlandsbusinesslink.co.uk East Midlands Business Link 27 HEALTHCARE T he outbreak of COVID-19, the new devastating strain of coronavirus, isn’t only affecting a handful of sectors, but the entire global economy and almost every industrial sector. On a purely business level, the effects can be felt across all departments – from payroll and HR right through to sales. The official word to businesses from government is that workplaces and company bosses should encourage their employees to work from home, wherever possible. Moreover, if an employee becomes unwell in the workplace with COVID-19 symptoms – a new, continuous cough and/or a high temperature – they should be sent home immediately to self-isolate. Over the last few weeks, government has put a healthcare onus on businesses to set up their workers from home. However, that’s only applicable to those deemed ‘non-essential’ as other ‘key workers’ continue to operate. This includes those in health & social care; education & childcare; key public services such as those essential to the running of the justice system, religious staff, charities and workers delivering frontline services; local & national government; food & other necessary goods; public safety & national security; transport, and utilities, communication & financial services. In all sectors, those deemed essential and otherwise, workplace health and good hygiene practices have become increasingly important. For example, employers are legally required to have hand sanitiser and antibacterial handwash/soap in the workplace. However, with many workers now working from home, it’s critical that this same attention to hygiene does not go neglected. Along with social distancing measures already implemented by government, handwashing remains one of the most important actions individuals can take to limit the spread of the virus. Whether in the office or not, individuals should be washing their hands thoroughly after coughing, sneezing, touching their face, before eating and, crucially, after coming in from outside, whether that’s from food shopping or exercise, as per the government’s lockdown regulations. Whether an employee is working from home or designated a key worker, they will need to self-isolate if they exhibit symptoms of the virus or have a confirmed infection and should therefore be entitled to £94.25 per week of 28 Á COVID-19 is the biggest and most profound healthcare issue facing businesses at present. Here we explore how the outbreak has affected businesses and how employers and employees alike can help to limit the spread. © Shutterstock /Maridav 26-28.qxp_Layout 1 02/04/2020 14:29 Page 228 East Midlands Business Link www.eastmidlandsbusinesslink.co.uk HEALTHCARE Statutory Sick Pay (SSP). For businesses concerned about paying workers during potential absences – especially at a time when earnings may be dropping – government has provided support. For businesses with fewer than 250 employees, the cost of providing fourteen days of SSP per employee will be refunded in full. Employers have therefore been advised to keep a record of COVID-19 related staff absences. Bosses should also bear in mind that elements of their sickness absence policies may be incompatible with public health guidance. For example, sick pay policies usually require a doctor’s note to certify longer absences, but public health guidelines are to self-isolate and consult NHS 111 rather than go to their GP or hospital. At present, it remains unclear how exactly these funds will be issued. However, government has said that it “will work with employers over the coming months to set up the repayment mechanism for employers as soon as possible”. If a company does offer contractual sick pay, the Confederation of British Industry (CBI) says it’s good practice to pay this to individuals having to self- isolate. The organisations recommends that employers extend SSP to all contracted workers including agency staff and those on flexible and zero hours contracts. Despite more guidance and an increase in measures from government, company owners still lack clarity. Business insurance providers have reported a spike in calls and queries regarding health, travel and business insurance specifically. It comes as businesses look for support to either supplement financial support that has been made available by government or in its place as there are many companies that are unable to receive this support. Despite this rise in calls, cover for COVID-19 isn’t guaranteed on business insurance. Axa, one of the biggest business insurance providers, says that it won’t cover for the virus unless it is specifically named in the terms as other insurers including RSA, Allianz, NIG and Ageas respond to the crisis. Following the outbreak, the provider said it will only cover specified diseases for business interruption. “Our wordings don’t refer to a general class of notifiable diseases, but they name each disease individually. When COVID-19 was added to the list of notifiable diseases in England, it did not change policy coverage,” it said in a statement. Companies have an important role to play in encouraging employees to follow public health advice and, where applicable, new government regulations. Limiting the spread of the disease depends on it and given then impact coronavirus is having on the business landscape, the future of the nation’s businesses may well depend on it too. © Shutterstock /Maridav 26-28.qxp_Layout 1 02/04/2020 14:29 Page 3Subscribe now and receive Business Link every month, delivered to your door Delivery Details Name:............................................................................................ Position:......................................................................................... Company:...................................................................................... Address:......................................................................................... ........................................................................................................ Postcode:....................................................................................... 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