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It is time for Irish businesses to turn concern into action

Oct 16, 2020

With the end of the Brexit transition period is just weeks away, Colleen Flanagan shares her six top tips to help Irish businesses prepare for a new trading relationship with the UK. 

The economic and social chaos caused by COVID-19 left few aspects of life unaffected, but one thing has not changed: the date on which the Brexit transition period will end. With 31 December 2020 just weeks away, businesses must prepare for the inevitable changes and disruption that lie ahead.

Much like COVID-19, the economic impact of Brexit will not be felt evenly by all businesses, but almost no business will remain untouched. 

Brexit Readiness Action Plan

In September 2020, the Irish Government launched a Brexit Readiness Action Plan. Measures being taken to support business include:

  • a Customs Roll-On Roll-Off Service, facilitating just-in-time business models;
  • Authorised Economic Operator status, allowing traders to enjoy certain customs-related benefits throughout the EU;
  • potential deferral of import duties until the month following import; and
  • the proposed introduction of deferred VAT accounting.

However, the plan also highlights the need for businesses to help themselves by finalising their contingency planning and taking preparatory action.

Six key preparation steps for Irish businesses trading with the UK

The following actions should be taken to prepare for the end of the transition period:

1. Register for an EORI number

An EORI (Economic Operators Registration Identification) number is a tax reference number and is available from Revenue. It is essential for any Irish business intending to trade between Ireland and the UK after 31 December 2020.

2. Utilise available supports 

Supports for businesses include:

  • Enterprise Ireland’s Ready for Customs grant, which allows businesses to claim up to €9,000 for each eligible employee hired/redeployed to a dedicated Customs role. Enterprise Ireland also provides a range of financial planning supports, notably the Act On Initiative, Be Prepared Grant, Strategic Consultancy Grant, Market Discovery Fund, Agile Innovation Fund and Operational Excellence Offer.
  • InterTradeIreland’s advisory services and Brexit Planning Voucher worth up to £2,000/€2,250 per business;
  • one-to-one Brexit mentoring and training workshops organised by the Local Enterprise Offices; and
  • the Brexit Loan Scheme for businesses with fewer than 500 employees.

Budget 2021 also provided €100 million to enable departments to provide Brexit supports. These include:

  • €8 million for new market surveillance and certification;
  • €15 million to help businesses respond to changes to customs and tariffs;
  • €7 million to help the food processing industry adapt;
  • €11 million for Local Enterprise Offices to work with local businesses; and
  • €675,000 for InterTradeIreland to provide practical help to businesses trading cross-border.

As such, we will likely see further business supports announced in the months ahead.

3. Understand the impact on your supply chain

The origin of goods will be key in determining the amount of duty payable on goods moving between the UK and Ireland. It is imperative that you understand from where goods originate, the value of the goods, and the relevant customs classification code. If any materials are likely to be significantly impacted or no longer authorised for sale in the European single market, you may need to identify alternative certified sources. If significant supply chain disruption is likely, you may need to consider alternative routes.

4. Communicate with suppliers, agents, clients, customers, and staff

Hold discussions with your suppliers and Customs/logistics agents. The roles and responsibilities of each party must be clearly defined and understood.

If using the UK landbridge, work with your bank to ensure you have the necessary financial guarantee in place.

If increased costs must be passed on to your customers or clients, or if there is likely to be a significant impact on lead time, discuss these changes with customers in advance.

Ensure designated personnel within your organisation are clear on their responsibilities and have sufficient knowledge and training to comply with the additional regulatory and certification requirements.

5. Determine the cash flow implications

Prepare a cash flow forecast that incorporates potential tariffs, duties, and VAT. Expected exchange rate fluctuations should also be included. Consider whether your current banking facilities are sufficient to support any additional cash needs. Financial supports are available to facilitate cash flow planning.

6. Consider additional regulatory requirements

From 1 January 2021, UK bodies will no longer be authorised to certify compliance with EU regulatory standards. If your business relies on certification from a UK notified body, it is vital that you now source an EU-based notified body. This may impact on the marketing and labelling of goods.

There are also potential implications for the recognition of EU professional qualifications in the UK (and vice versa) and the transfer of personal data between Ireland and the UK. Engagement with regulators is key to ensuring continued regulatory compliance after 31 December 2020.

Colleen Flanagan is a Manager at PKF-FPM Accountants Limited.