Three Ways to Prepare for Brexit
The UK's post-Brexit transition period ends in January 2021. The deadline for agreeing a deal with the EU is December and with little progress apparent in negotiations, small business owners and SMEs could understandably be concerned. Here we provide some practical advice on what small businesses should be doing to prepare in three key areas.
Trade
Trade borders, and potential tariffs, are likely to be one of the major adjustments that need to be made by companies. First and foremost, if you trade any goods or services to the EU, the amount of paperwork associated with that will increase substantially. Customs declarations will need to be made either by you or an agent and every importer or exporter will need to apply for a company EORI number.
All the extra paperwork will likely lead to longer queues at ports and so physical supply chains will likely lag under the weight. As such, flex should be built into delivery times to adjust for this. The slowing down of supply chains may also lead to cash flow issues as goods supplied to the EU will likely be paid for later than they currently are. If you do send goods across the UK-EU border, the government website has detailed guidance on exactly what you need to do, given the goods you sell.
One implication will be a difference in VAT for EU imports and exports. If your business is B2B, there will not likely be a financial hit, but there will be more to process. If, however, you are involved in B2C selling, there will likely be financial implications.
For all of the issues mentioned above, Dragon Argent can offer advice and guidance on how to apply them to the specifics of your company to ensure that you are Brexit ready in time for the end of the transition period.
Data Transfer
if no agreement is reached by December, the UK will become a third country to the EU and will not have adequacy – at least not right after Brexit. So new restrictions for EU-UK data transfers will apply – at least in theory.
UK to EU transfers: The transfer of personal data from the UK to EU member states will, according to the Government, remain unaffected. The Government has stated, “In recognition of the unprecedented degree of alignment between the UK and EU’s data protection regimes, the UK would at the point of exit continue to allow the free flow of personal data from the UK to the EU.”
EU to UK transfers: UK organisations which receive any transfers of personal data of EU citizens, or any personal data from EU member states, need to prepare for the possibility of no deal. Initially, at the least, the UK will not be deemed an adequate country and there will be a burden for compliance with Articles 46-49 of GDPR on organisations sending personal data to the UK.
Organisations are being advised now to work with their EU partners to ensure compliant transfer of personal data between the UK and EU can be achieved.
The Government is advising that for most organisations the most relevant legal basis for such transfers would be Standard Contractual Clauses (SCCs). These EC-approved data protection clauses, often known as model clauses, need to be embedded within contracts (without any changes), or added as an appendix to an existing contract, which may need to be reviewed on this point to avoid ambiguity. They cover the contractual obligations between both parties to protect the rights of the individuals whose data is being transferred. So model clauses are the way to go.
Dragon Argent have advised countless clients in the implementation and adoption of these SCCs so please get in touch if you would like to discuss the preparations you can make regarding data transfer.
Employment
For employers based in the UK who have EU employees, there are steps that both parties should be taking now, whilst the transitional period for withdrawal of the UK from the EU is in place. There is a proposal for a new immigration system for EU nationals wishing to work in the UK, which provisionally will come into force on 1st January 2021. Employers should conduct a simple audit of HR documentation, specifically pertaining to right to work checks for all employees to ensure they have compliant records.
EU citizens employed in the UK should apply for settled status. Current government guidance suggests employers do not need to check their current EEA employees have applied for status under the EU settlement scheme and can rely on their existing right to work check which should have happened at the start of their employment.
Once an application is made for settled status, an applicant is entitled to remain for up to two years or when a decision is made by the Home Office. As the Home Office is processing applications slowly at the moment, this should provide mitigation to any immediate disruption caused by the UK’s withdrawal from the EU, although the right to work landscape is constantly evolving and will have to be monitored closely.
Dragon Argent have deep employment law knowledge and are constantly tracking the situation regarding right to work. If you would like to discuss either conducting an HR audit or any other employment issue associated with Brexit, please get in touch.
We hope this short summary will prove useful and we’ll continue to keep you updated on the latest announcements and how they impact startups and SMEs.