Preparing for Brexit
by the BMF
30 April 2019
With no certainty of an agreed Brexit deal within the original timescale, the BMF has outlined several areas to consider in preparing for a no deal departure.
VAT on Imports
VAT is an EU tax and BMF concern focused on having to pay 20% extra up front on imports under a “no deal” Brexit. BMF lobbying helped secure a concession from HM Treasury to ease the impact on importers’ cashflow and costs. Under this, VAT-registered businesses will be able to account for import VAT on their VAT return, instead of paying import VAT before goods can be released from ports. The concession applies to imports from both EU and non-EU countries. https://www.gov.uk/guidance/accounting-for-import-vat
Leaving the EU Customs Union means that customs, excise and VAT requirements will apply in much the same way as goods traded with non-EU countries. This means tariffs on UK exports as well as customs checks and paying duties and VAT at the border in the event of no deal.
The BMF recommends reviewing current and future contracts to establish who is liable to pay any tariffs, duties and VAT that may apply post-Brexit. We further recommend checking contracts and insurance to see who is liable if goods are delayed in transit at ports and airports. https://www.gov.uk/guidance/trading-timber-imports-and-exports-if-theres-no-brexit-deal
People and Employment
Leaving the EU means the end to the free movement of people. The Home Secretary proposes a £30,000 salary threshold below which migrant workers will not be allowed in. If this is implemented it is likely to cause labour shortages amongst construction workers, particularly labourers. The Home Office has published guidance about the Right to Work and what employers must do to prevent illegal working by conducting checks before taking on new staff. https://www.gov.uk/view-right-to-work
The EU Settlement Scheme will enable citizens from the EU, Norway, Iceland, Liechtenstein and Switzerland currently residing in the UK to continue living here after 30 June 2021. Certain foreign nationals may be able to stay here without applying, notably Irish citizens and those who have indefinite leave to enter or remain in the UK.
Employers may wish to help staff apply for Settled Status, and the scheme should be open fully for applications by end of March this year. https://www.gov.uk/government/publications/eu-settlement-scheme-employer-toolkit
There is no clamour to scrap or weaken regulations and standards on product liability, conformity marking etc. Following a no deal departure all existing European harmonised standards will become identical UK designated standards.
However, the current CE safety mark placed on products is for the EU only. The government has published proposals to replace CE marking with a new UKCA mark (UK Conformity Assessed) for products sold in Great Britain and Northern Ireland post Brexit.
A no deal Brexit also means that the EU will stop recognising the competency of UK based Notified Bodies (British Standards Institute and British Board of Agrément) to assess products for the EU market. The government intends to reclassify UK Notified bodies as UK Approved bodies, which will be eligible to assess products and issue the new UKCA mark to compliant products.
Manufacturers will only be allowed to use CE marking on goods for sale in the UK for a limited period. Those who export goods to the EU may find it desirable to show both marks, CE for EU markets and UKCA for UK sales. This inevitably means that they will have to change packaging, advertising, declarations of performance, user guidance etc to display the new logo, with all the extra cost involved.
There will be a consultation paper and, in most cases, manufacturers will not have to adopt the UKCA mark straight away, but there may be a rush to have goods tested by UK Approved Bodies to assess compliance in preparation for the changes. https://www.gov.uk/guidance/construction-products-regulation-if-there-is-no-brexit-deal
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This article first appeared in the April 2019 edition of Builders Merchants Journal