I have been reading a lot about Brexit recently. As of November 2020, I am in the middle of a project on behalf of LEO Mayo to talk to their clients about Brexit preparation. So since mid-October 2020, I have spoken to nearly 40 owner-managers about the potential impact of Brexit on their business and how they are preparing for the UK’s exit from the European Union [the UK left the EU on 31st January 2020 and the withdrawal agreement concludes on 1st January 2021].
This blogpost will use a FAQ format to discuss the various strands of the Brexit issue with the aim of helping small business owners to quickly search for answers to very specific questions relating to the UK’s departure from the EU.
Please note that I have posed very practical questions. I have tried to answer definitively but plainly and to keep it practical. I have also linked to nearly every reputable source that I found online to verify the answers. I do intend to update the answers as the situation evolves. So please treat the answers as the first step or guide to the answer which will need to be further addressed given the circumstances of your own business. (click to expand on the 3 RED HEADINGs below to see all 40 questions)
The big word associated with Brexit is uncertainty. Hopefully, greater clarity will be forthcoming in the coming weeks as the end of 2020 approaches from both the EU and the UK Authorities (great guide for EU businesses on trading with the UK).
At this stage, it is incumbent on all small businesses and employers in Ireland to prepare for Brexit by considering all the options and scenarios. My advice would be to contact your Local Enterprise Office to ask for their assistance in creating a plan for 2021 for your business.
As always, I hope you find this article of value. Social shares and comments are appreciated. And I would be delighted if more questions can be posted so that I can add to my list of FAQ on Brexit for microenterprise in Ireland. It is by sharing our experience that we can all learn.
Donncha (@donnchadhh on Twitter)
BREXIT DEAL & TARIFFS
The first series of questions relate to Deal/ No Deal and Tariffs:
1. Will there be a Trade Deal between the EU and the UK?
Your guess is as good as mine. But seriously there are differing opinions on this one. One would say that the UK want a Trade Deal whilst it is probably also true that there are stakeholders in the UK who do not care if a trade deal is done as they want to see Brexit implemented.
Ireland’s Department of Foreign Affairs has a very good FAQ of their own. It’s BREXIT FAQs provide an up to date picture on the negotiations.
2. Does the Government have a plan or overall strategy for Brexit?
Yes – they published a Brexit Readiness Action Plan in September 2020.
@BrexitReadyIRL is the main government Twitter account for the latest Brexit news
3. Will there be tariffs between Ireland (EU States) and England (UK) and what will they be for specific sectors or categories of goods?
In the event that the UK concludes the transition period before agreeing to a deal with the EU on free trade, there will be tariffs. Trade would then have to be on terms set by the World Trade Organization (WTO), an agency with 162 member countries.
- Agri – very high
- Bakery & Confectionary 8%
- Woven fabrics and carpets 8%
- Footwear 16% clothes 12% and babywear 10%
- Mechanical equipment 2 to 8%
- No tariff on medical devices
- Manufactured items 4 to 6%
In general, the importer pays the tariff. Tariffs on goods entering the UK will be paid to HMRC. Irish exporters will not usually ‘pay’ the tariff rather they experience adverse effects from their product being made more expensive on the foreign market. This means they may have to cut their prices to remain competitive
The response from LEO Mayo’s client base was that customs duties in themselves are mainly not high at circa 4% with the exceptions being agricultural/food and clothing.
4. Can I find out the tariff that will apply to my product or good – for both import and export?
InterTrade Ireland has published a simple tariff checker based on 2016 codes:
The InterTrade Ireland page states that for the latest information on current classification codes, quotas, and limitations please consult with Revenue and HMRC. The revenue site will direct you to use TARIC to classify your goods- the integrated Tariff of the European Union. You can also check out the EU Market Access database on tariffs.
5. What is the difference between duty and tariffs?
While the terms are often used interchangeably they are different. The most important distinction between the two types of tax is that a duty is charged to the consumer for specific commodities, whether they are domestically produced or imported goods. When one refers to duties, the normal ones are excise duties. These are imposed principally on alcohol, cigarettes and petrol/diesel, regardless of whether such products are imported or produced domestically.
Tariffs, on the other hand, are only charged on imports in order to protect domestic production and restrict trade from a particular country (to include quotas), as well as generate revenue for the government. There is no cost to the exporter as the tariff is paid by the importer of record.
What some people often confuse is tariffs or customs duties v VAT. I have heard people reference customs duties or tariffs of say 27% when really what is in question is VAT at 21% (for the moment) plus customs duty. Incidentally, VAT is also imposed on the customs duty (and insurance/freight) – if something costs €1000 including customs duty and freight charges, the VAT is on the full €1,000.
6. What is the ‘Canada style’ deal that Boris is talking about?
According to the BBC, UK Prime Minister Boris Johnson has said when it comes to trade with the EU after Brexit: “We want a comprehensive free trade agreement, similar to Canada’s”.
The EU-Canada Comprehensive Economic and Trade Agreement (CETA) is the trade agreement that applies between the EU and Canada. It cuts tariffs and makes it easier to export goods and services, benefitting people and businesses in both the EU and Canada. CETA entered into force provisionally on 21 September 2017, meaning most of the agreement now applies. It is interesting to note that the agreement process was initiated ten years earlier with an agreement in principle reached in October 2013 – so these trade deals take a long time to finalise.
7. What are non-tariff barriers?
Non-tariff barriers include things like product standards, packaging and labelling, safety regulations and sanitary checks on food and animals. Some of these will apply with or without a deal.
The Gov.uk/eubusiness website has links for further information for agri-food producers on:
- exporting animals and animal products to Great Britain must comply with new Sanitary and Phytosanitary requirements from 1 January 2021.
- imports of animal and animal products from Great Britain to the EU must comply with new Sanitary and Phytosanitary requirements.
- EU exports of plants, fruit and vegetables to Great Britain must comply with new Phytosanitary requirements, including phytosanitary certificates plus check if your plants require laboratory testing of samples to ensure they are free from pests and diseases or inspections during the growing season.
- Trading timber
8. Where do I go to find out about the standards and certification of products?
Product manufacturers will need to review product marking, labelling, and packaging to ensure compliance with end-market regulations both UK and EU.
The NSAI Brexit Unit is specifically focused on examining and communicating the impacts of Brexit on the Standards and Certification of products and services.
If you use a UK notified body for conformity assessment you will need to transfer to an EU notified body. A list of EU notified bodies is available on the EU Commission’s NANDO database. This process can be both expensive and time consuming. I was talking to a company in Mayo in the marine sector who were quoted several thousand by a notified body in Holland.
I was also talking to an Architect and he is a member of RIAI. He will now need to register as an Architect in the UK to provide services there – this is automatic as he is a member of RIAI. (The UK government and European Commission have stated that professional qualifications registered with the relevant competent authority before the end of the transition period will continue to be recognised in line with local rules).
According to the Irish Exporters association website, there is a 9-month exemption for UK hauliers from international haulage licenses.
9. What is going to happen to the cost of flights to/from the UK?
I am not really going to answer this question. But I did find a very interesting update from the Maples group on the impact of a No Deal Brexit on the Aviation Industry dated March 2019 which highlighted that the granting of a 12-month extension of aviation access rights for UK airlines to the EU. The article concluded:
The UK is the largest aviation market in the EU, with UK passengers, constituting one third of all intra-EU journeys and one quarter of journeys from the EU to third countries. In this context, it is hard to envisage a situation where a significant restriction on flights will be allowed to occur. Such an outcome would be unwelcome for all; we are already seeing aviation companies stockpile parts which will negatively impact business. However, while the political will to facilitate travel arrangements may be there, there are significant legislative and regulatory obstacles to overcome and it remains to be seen on whose terms any final arrangements will be.
10. Where can I find out about Food standards, certification and labelling for Food products – both import and export?
The Food Safety Authority of Ireland Brexit website explains that Irish businesses that wish to sell any food product in the UK will need to adhere to the rules and requirements for exporting outside the Single Market, as well as to UK import requirements.
There is a specific page on food product labelling that explains that, from 1 January 2021, if the food supplier is not established in the EU, the name and address of the importer into the EU market must be indicated on the label. For food labelling purposes, under the terms of the Protocol on Ireland and Northern Ireland at the end of the transition period, the address of a food business operator established in Northern Ireland will continue to be accepted as an EU address.
11. Will Brexit impact Intellectual property rights in the UK?
There is a very interesting article on the EI website by Joe Doyle on the topic of how brexit will impact on Intellectual property. Enterprise Ireland also hosted a special lunchtime seminar that can be replayed.
Trade Marks – Joe writes that according to the draft Withdrawal Agreement, the negotiating parties have agreed that owners of EU TMs and RCDs, granted before the end of the transition period in 2020, will automatically get an equivalent right in the UK.
Patents – will not be affected because the European Patent Office is not an EU institution.
IMPORTING, EXPORTING AND TRADE NORTH/SOUTH
The next series of questions relate to Importing, Exporting and Trade with Northern Ireland
12. What will happen when buying goods for personal use from the UK – buying online?
If you are buying goods online (or by mail order), the buyer is ultimately responsible for the accuracy of the customs declaration and to pay any duty and tax to Revenue – see revenue page on buying good online for personal use from outside the EU. This is the situation at present if you purchase goods online from countries outside the EU like the US. Unfortunately, some websites do not include details of duty and VAT in their prices so figuring out the final price can be challenging.
If the order is sent by post, their postal provider or courier will require them to complete a form for the customs declaration. When it arrives in Ireland, An Post or your courier will calculate the VAT and duty owed and facilitate payment on collection – payment must be made before or on delivery [make sure to factor in VAT when comparing prices available in Ireland]. There will be a Customs docket with the delivery to prove that the customs declaration was made.
A fee of 1% of the value of the packet or parcel, with a minimum charge of €10, is charged by An Post for customs clearance of parcels imported from countries outside the EU. This fee is in addition to any duty or VAT payable.
PARCEL MOTEL UPDATE:
13. What will happen when buying goods for commercial use from the UK?
The answer depends on the volume, frequency and value of the import trade. In September 2020 Revenue produced a comprehensive ‘Guide to Customs Import Procedures‘.
A. Large scale importer
Large scale importer will probably have internal staff and systems for importing. They will have registered with Customs /Revenue and use the prescribed software to declare imports electronically using the new AIS system (for more see Q.15).
These businesses will probably avail of the ‘Ready for Customs‘ Grant from Enterprise Ireland which provides up to €9,000 per employee working on Customs Clearance. They may also avail of Skillnet Ireland’s Clear Customs online training which is described as being ideal for those trading regularly with the UK.
B. Less frequent importer or smaller business
A smaller business or one which imports less frequently will probably work with a Customs Agent to arrange import clearance. I had a great conversation with Ed Campion of Campion Freight, a freight forwarder which has been offering Customs Clearance services in Mayo for over 20 years, working with global clients importing and exporting beyond the EU to China, the US and Canada. Campion Freight charges a customs clearance fee of EUR 65 for import clearance and EUR 45 for export clearance. The sector is expecting to be very busy as a result of Brexit.
C. Direct Importers using Couriers and An Post.
The procedure for importing and the documentation involved in importing goods using the postal system and couriers depends on the value of the goods/ consignment as explained in this Revenue guide on importing goods through the post. The answer is similar to Q.10. Your supplier will complete the customs declarations which will be attached to the outside of the package.
- CN 22 form – for packages which are under 2kgs in weight or valued less than €300
- CN 23 form – for packages valued in excess of €300
- An electronic customs declaration is required for imports of a declared value of more than €1,000. In these cases, Revenue at the postal depot will send a notice of arrival to the addressee asking them to clear the goods. If you are not connected to Revenue’s AIS system you may employ a customs clearance agent to clear your goods through Customs on your behalf although they will charge for their service.
To conclude, under international postal agreements all packages received from outside of the EU require a customs declaration.
14. Will the new customs requirements create a barrier to trade with the UK?
There are media reports that there will huge delays in shipments to the UK to include the landbridge to Europe. I spoke to a small bespoke engineering solution company in Mayo who said that the inability to order parts in very small order quantities on a 2-3 day turn around from the UK would impact on their ability to provide top-quality service to their customers. It would be near impossible to keep in stock all the possible required parts given the range of parts that they use across their projects.
There are no direct fees levied by Revenue for dealing with Customs in Ireland. The additional costs will arise from compliance costs as per the options outlined in Q13.
I was talking to a company involved in fashion production who have an extensive catalogue with many products made to order which result in small orders to input suppliers based in the UK. The sustainability of their extensive product lines is now called into question unless they increase their stock range.
It is anticipated that there will be an increase in agents and intermediaries who will import in bulk replacing smaller direct orders from microenterprise with specialist suppliers in the UK. This will add a layer of cost to the supply chain and affect the competitiveness of some sectors particularly engineering.
15. Is there an online system for import declarations?
You are legally obliged, as an importer of goods from GB, to submit an electronic import declaration to Irish customs. Full detail on electronic customs systems and information on the technical requirements for customs is available on the Revenue website.
Revenue will implement a new national import system on Monday, 23 November 2020 at 9:00 am. This new Automated Import System (AIS) has been introduced to comply with the provisions of the Union Customs Code (UCC). AIS will ensure that businesses can import goods legally from outside the EU using the most efficient process possible. This will replace the Automated Entry Processing (AEP) system. Revenue operates a helpline for queries on the system. It is intended that the AIS will integrate fully with ROS the Revenue Online Service.
16. How are import duties paid to Customs and what is a Comprehensive Guarantee?
Payment of duties is via ROS (Revenue Online Service). Payment can be by credit and debit card, or bank transfer and direct debit.
Revenue also offers a deferred payment method which allows payment of import charges to be made on the 15th day of the month following import.
If you wish to avail of this facility, you will have to apply for authorisation from Revenue and have been approved for a comprehensive guarantee from your bank. A comprehensive guarantee is a guarantee issued by a bank or financial institution, undertaking to Revenue to pay duty owed by a business up to a prescribed limit, in the event that the business defaults on payment.
The Customs Guarantee is discussed in the EI Customs Online Course (see Q.32)
17. What will happen when exporting goods to the UK?
The Irish Exporters Association IEA has an extensive webpage with information, links and important contact details to help your businesses prepare for Brexit. Similar to Q.13 regarding imports the options will be to manage export administration internally, to use an agent, or to rely on the postal system and couriers.
In Mayo, I was talking to a kitchen manufacturer who sells a lot of premium kitchens in the UK particularly in London. He has an installer based in London. He arranges delivery using a local company who load up 3 van loads per kitchen to deliver to London. The likelihood is that the kitchen manufacturer will work with a Customs Agent to ensure that the current arrangement can continue – along with potential shipment delays, the big concern is currency fluctuations and of course potential tariffs.
Revenue published a very clear ‘Guide to Export Procedures‘ in May 2020.
- export means sending goods from Ireland to a country outside the EU.
- An export declaration containing specific items relating to safety and security requirements must be lodged, using the AEP system, in advance of an export movement.
18. What is the 6-month derogation for delaying declarations for EU goods from January 1st in the UK?
The UK Revenue & Customs will allow importers into the UK to delay production of post-Brexit customs declarations and tariff payment between 1 January and 30 June 2021. All records will be kept by the company and passed onto HMRC along with payment in July 2021. This is relevant for companies, including Irish businesses based in the UK, who import into the UK that are approved to use simplified declarations by HMRC. It is not anticipated that this arrangement will be reciprocated by the EU.
19. How will goods in transit via the UK to and from Europe be affected?
This is relevant if you intend to continue to use the infamous landbridge that the UK has become for goods to and from Ireland. This is a situation where a freight forwarder or customs agent is the best option. You do need to be careful in completing the paperwork to ensure that you are not charged VAT on the goods in transit.
Your Agent (or internal expert) will utilise the Transit Procedure, a customs procedure that allows goods to be moved across international borders under customs controla customs procedure that allows goods to be moved across international borders under customs control. A comprehensive guarantee as per Q16 is required to secure all charges on the goods.
20. Is there an online system for export declarations?
Exports will continue to be managed through the AEP system until 2023. The Automated Entry Processing (AEP) system handles the validation, processing, duty accounting and clearance of customs declarations.
21. What is EORI – customs registration number – and how does your business get one?
If you are a trader who imports or exports goods into or out of the EU you will need an Economic Operators Registration and Identification (EORI) number. Yes, every business needs to get an EORI if they intend to trade with the UK – no exceptions. This number is valid throughout the EU. It is used as a common reference number for interactions with the customs authorities in any Member State. Consult with the Revenue website to find out more and to register for your EORI number.
BTW, there are also separate UK EORI and Northern Ireland EORI numbers. The UK EORI is needed to move goods between the UK and non-EU countries while from 1 January 2021 you’ll need an EORI number that starts with XI to move goods between Northern Ireland and non-EU countries.
22. What are Incoterms?
Incoterm an abbreviation of “International Commercial Terms” defines a transaction between importer and exporter, so that both parties understand the tasks, costs, risks and responsibilities, as well as the logistics and transportation of a product from one country to another. The following are examples:
- Ex Works (EXW) – The seller makes the goods available at a designated location, and the buyer must cover the transport costs.
- Free on Board (FOB) –The seller must load the goods on board of the ship, nominated by the buyer at which point all liability transfers to the buyer.
- Free Alongside Ship (FAS) – The seller must place the goods alongside the ship at the named port, the risk of loss or damage to the goods passes when the goods are alongside the ship, and the buyer bears all the costs from that moment on.
The fine print of a contract dictates which party is the importer and exporter of record ie who is responsible for making the export declarations and ensuring the accuracy of the information.
23. What about VAT on goods from the UK?
At present, if you are an Irish VAT registered business importing from a VAT registered UK business you will not be charged VAT. This situation will not change. This transaction will be recorded as an import as part of your VAT return.
If you an Irish consumer importing from a UK business you will not be charged UK VAT rather you will have to pay the equivalent VAT applied in Ireland (generally 23%) when the product is delivered. The calculations involved are explained on the Revenue website which explains that all goods with a customs value over €22 will incur VAT. This includes the value of the item plus the transport fee.
This December 2020 Irish Times article explains that online purchases after Brexit could see 40% price hikes for online shoppers. This RTE article states that Irish consumers make 70% of their online purchases from the UK explaining the following Revenue rules which the majority of people don’t know about:
- Anything priced under €22 will not face any additional import charges (until 1 July next year when new EU e-commerce rules will mean that all purchases from non-EU online sellers will be subject to VAT, including those under €22)
- If goods are valued at more than €22 including shipping, delivery, insurance and handling charges, then VAT will be payable.
- If goods are valued at more than €150, consumers will face not only VAT but also customs duty. The charges will either be applied by the retailer selling the goods, or by authorities here on arrival.
24. Should VAT be charged on goods supplied to UK business customers?
At present, if you are an Irish business selling to a VAT registered UK business you will not charge VAT. This situation will not change – as explained in this article the technicalities will change but the end result will not.
The overall situation regarding VAT & Customs is best explained in this article from KPMG of the key VAT & Customs changes arising from Brexit.
The changes in the UK are explained in this HM Revenue and Customs policy paper on changes to VAT from 1st January 2021.
HMRC has launched an online VAT number checker service as it is important when dealing on B2B transactions in particular that parties verify each other’s VAT numbers
25. How will eCommerce businesses be affected?
This is my understanding of this situation which outlines an unwelcome situation but which cannot be ignored.
- The Irish business selling online will now have to register for VAT in the UK if they wish to sell B2C items online. They will charge the UK vat rate to UK based customers. The UK consumer is therefore charged the full UK Price.
- The Irish business will then to do a VAT return in the UK. There will not be a threshold so every business will have to register. The alternative is to decide not to sell online to UK based consumers
- The UK consumer will have to do a Customs declaration. This is managed by the courier or postal service. The Irish operator fills in a form provided by courier or postage service that accompanies the package.
- If there are tariffs, the UK consumer will have to pay that. This will be collected by the courier on delivery.
But that is not the end of the story.
- Where goods are sent as part of a single consignment with other goods, and the customs value of the consignment exceeds £135, the consignment will not be subject to the new measure. In this case, the Irish operator does not charge VAT but notes the value of the consignment on the document. The UK consumer will have to pay the UK Vat rate plus any customs duty to clear customs – this is referred to as import VAT.
So what to do:
- Talk to your accountant to register for VAT in the UK or do it yourself. Or look at a service like https://simplyvat.com/ in the UK. [You don’t need to set up a company in the UK]
- Talk to An Post or courier. DPD have a great website: https://dpd.ie/Shipping/Brexit-Update-For-Shippers
- Look at an eCommerce fulfilment service like https://redwireblue.com/
- Talk to your web developer to have a plan to segregrate consumers from the UK depending on whether the basket purchase is above or below the £135 threshold.
Please note that your UK customer (B2C) will also be responsible for paying Customs Clearance fees. A google search finds this Parcelforce page which explains that the customs fee is £12 for all import parcels below a contents value of £873 (equivalent to €1000) and £25.00 where the parcel is valued over €1000/£873.
26. How will professional services be affected?
Professional services are not affected by WTO Tariffs and Customs procedures. However, there are some implications.
- I spoke to a software company who have now moved their UK clients to Amazon servers in the UK with all other clients hosted from HQ in Mayo using EU based amazon servers. This is to comply with Data regulation to include GDPR (which will no longer apply in the UK).
- It must be acknowledged that UK customers want to deal with Irish companies who are committed to the market. It is advisable to register a UK business if you want to sell professional services. I spoke to an Architect and a Lean Consultant who both sell on a subcontract basis to one customer in the UK. They would not need to register a company in the UK in this instance but would find it difficult to expand the business on this basis.
- I also spoke to a kitchen installer. If they send staff to install in the UK they would need to do a customs declaration on the equipment that they use to allow it to be transported into and back out of the UK.
- I also spoke to a company who sell Statistical analysis consultancy to UK customers – I highlighted the issue of data transfer as a potential issue. The key recommendation is to talk to your customer as ultimately it is an issue that they must manage.
- The Law Society has an extensive FAQ on Brexit in terms of recognition of qualifications and provision of legal services
- The other issue for service businesses arises when employees are based more permanently in the UK. This will require registering as a business and an employer in the UK. But Irish people won’t need to apply for a Visa*.
*The UK’s immigration system will now apply to EU, EEA and EU citizens. For visits under 6 months, EU, EEA and Swiss citizens will be able to enter the UK without applying for a visa. They may participate in business-related activities, such as meetings, events and conferences. If you require EU, EEA or Swiss citizens to go to the UK to work for longer than 6 months, you’ll need to check the UK’s immigration laws. The new rules do not apply to Irish citizens because of the Common Travel Area arrangement.
27. What will happen in relation to trade between Northern Ireland and the Republic of Ireland in terms of VAT, Customs and Tariffs?
The intention of the Withdrawal Agreement (NI Protocol) is that there would be no change in VAT, Customs (controls/documentation) or Tariffs when trading North /South allowing for frictionless trade North/South.
PREPARING FOR BREXIT
The next series of questions relates to creating a plan for Brexit including supports from the State Agencies.
28. What should Irish microenterprise do to prepare for Brexit?
The Local Enterprise Office has prepared a fantastic document called ‘Simple Steps to prepare and protect your Small Business for Brexit‘. The 16-page pdf is really good. It presents a 5 step process – in a very accessible format. Step 1 is Risk Analysis as presented below.
The remaining 4 steps are:
2. Manage the Business Financials
3. Consider sales opportunities & diversification into new markets
4. Review/update Business Systems & Processes
5. Consider legal documentation, compliance & contracts.
29. What does my small business need to do to plan for Brexit?
Unfortunately, microenterprise could struggle with Brexit more than large businesses who will have the resources to manage the change. But we don’t have a choice and we are all in the same boat. Ultimately preparing for Brexit is about accessing the right information and interpreting it for your own business. Having reviewed the majority of state agency websites over the last few weeks there is a lot of information available. I particularly liked the 6 page Brexit Readiness pdf prepared by Revenue for LEO clients available from the LEO Mayo Brexit page which includes the following model:
Preparing for Brexit involves asking a series of questions and creating a plan on foot of the answers. I would suggest that the first step is to contact your Local Enterprise Office even if you have never contacted them before. They will be able to provide mentoring as the first step in creating a plan by asking the following questions:
- Do you have an EORI number?
Every business should apply for an EORI number from Revenue. For more see Q.19
- Have you talked to your suppliers?
- Talk to existing Irish suppliers to see that they are prepared for Brexit.
- Communicate with UK based suppliers to see that they are prepared. As per Q.13, they will need to furnish you with certain information to facilitate Customs declarations. They may decide to now use an intermediary such as a distributor in Ireland. While this might have a cost implication it would simplify the logistics and administration of customs and VAT for their Irish and EU customers.
- Look at replacing UK based suppliers with Irish or Northern Ireland based suppliers.
- Assess delivery timeframes – the current 2-day turnaround from the UK for small deliveries is probably not feasible.
- Do you need to upskill on customs for importing & exporting
I would suggest attending the LEO Customs training programmes to upskill on customs. But the first step is to talk to your Courier, Customs Clearance Agent or Freight Forwarder to see what they can do for you when importing and exporting. It is vital to get your tariff classification correct. Hopefully, they will manage everything for you.
- Check Certification and Standards – as per Q.8 and Q.10
- Talk to your Accountant
- Look at finance implications – will the cost of your products increase, will demand be affected and will cash flow be impacted?
- Do you need to register for VAT in the UK?
- Talk to your Bank
- Funding options
- Do you need a Comprehensive guarantee? See Q16 which addresses how import duty is paid to Customs and the requirement for a comprehensive guarantee from your bank to avail of the Revenue’s deferred payment facility for Customs duty
Prepare for Brexit.com lists 12 Brexit Essentials with links for further information on each issue. There is a good overlap but the guide does highlight the issue of ‘country of origin’
In customs terms, there are two main categories of origin . Goods that are “wholly obtained” e.g. strawberries grown, processed and packed in Ireland and goods that have been “sufficient processed” with materials from more than one country. Determining origin especially for manufactured goods can be complex as origin is determined by the country in which the last “substantial processing” took place.
30. What Brexit supports are available for business in Ireland?
The primary supports available depend on your State Agency as outlined on the prepare for Brexit website which lists supports from EI, LEO, Microfinance Ireland, NSAI, HSA, Skillnet and Strategic Banking Corporation of Ireland (SBCI).
A- ENTERPRISE IRELAND
Enterprise Ireland has made 3 new supports available to their client base as a result of Brexit. The prepareforbrexit.com website is the definitive guide on:
1. The Ready for Customs Grant will assist your business to increase its capacity to manage the customs process after 1st January 2021.
- Up to €9,000 is available for each new full-time employee engaged in customs work.
- This grant contributes to recruitment costs, employee costs and provision of IT infrastructure.
If you employ a new person to deal with customs on a part-time basis a grant of up to €4,500 is available.
2. The Brexit Act On programme delivered throughout two half-day sessions with an independent consultant focuses on assisting clients of EI to decide on specific actions to respond to Brexit under three areas (1) Financial and Currency Management (2) Strategic Sourcing and (3) Customs and Logistics.
3. The Be Prepared Grant is intended to provide strategic support to clients to use internal resources or a third-party consultant to undertake a short project to determine how the company could respond to Brexit. The grant of up to €5,000 or 50% of the total cost in financial support, can be used to help cover consultancy, travel and expenses for both domestic and international employee travel.
Also relevant when discussing new funding mechanisms introduced in 2020 by Enterprise Ireland is the Covid 19 based Sustaining Enterprise Fund particularly the Sustaining Enterprise Fund for Small Enterprise which will provide up to €50k short term working capital injection to eligible companies to support business continuity and strengthen their ability to return to growth and be trading strongly in 3 years time.
B- LOCAL ENTERPRISE OFFICE
The full list of Brexit supports available to LEO clients is listed on the national Local Enterprise Office website.
It has a page devoted to financial supports which lists of Brexit support available to LEO clients
This lists the standard financial supports offered subject to application and meeting criteria to include Feasibility, Priming, Business Expansion, TOV, and TAME.
Local Enterprise Offices work with clients on their applications to Microfinance Ireland (MFI) for small business loans of between €2,000 and €25,000 (unsecured). Loans for commercially viable proposals can be used to help fund start-up costs, working capital or business expansion. By applying for an MFI small business loan through a Local Enterprise Office, clients can avail of a 1% reduction in the interest rate charged.
The Brexit Loan Scheme, which was announced in the 2018 budget, will provide affordable financing to businesses that are either currently impacted by Brexit or will be in the future. The Scheme, which is delivered by the Strategic Banking Corporation of Ireland (SBCI) through commercial lenders will make €300 million available to eligible businesses with up to 499 employees at an interest rate of 4% or less.
I have been asked on many occasions if there is a specific Brexit Grant from LEO. The answer is No.
The key is to take the time to prepare your business for the potential impact. If your business is diversifying, entering new markets, engaging in R&D, or taking on people to service demand in existing markets to include the UK then the range of LEO supports will be relevant. As a mentor with both LEOs in Mayo and Galway, I would suggest that the soft support of mentoring is the first support to seek. There are specialist Brexit mentors as well as experts in all areas of business from finance, strategy, marketing, HR and compliance across all sectors and industries.
The Enterprise Europe Network (EEN) is also available to LEO clients to provide expert advice on internationalisation, sourcing technology and to identify trusted business partners. When talking about EEN I always refer to the brilliant support offered to Achill Oysters (Hugh O’Malley) as outlined in this youtube video.
The LEOs have devoted significant effort and attention to Covid-19 supports along with Brexit in 2020 so it is worth checking out their Covid 19 financial supports on the national website.
The Department of Business, Enterprise and Innovation have a super-comprehensive list of supports for Covid 19 impacted businesses to include financial, sector-specific supports and skills and training.
InterTrade Ireland based in Newry has specific Brexit supports for companies trading North/South.
Brexit Planning Voucher provides 100% financial support up to £2,000/€2,250 (inclusive of VAT) towards professional advice to help businesses to identify Brexit exposure and to plan. The Voucher can be used by the cross-border trader to complete a supply chain analysis of the business, map trade flows, review suppliers and explore the impact of the future trading environment. The Voucher can also be used to support other areas, for example, customs training.
There was a second voucher – a Brexit Implementation voucher – to provide financial support up to £5,000, with InterTradeIreland paying 50 per cent to allow businesses to implement critical changes identified in the stage one process; making them better prepared to deal with a new trading relationship. But this no longer seems to be available.
31. Are there soft supports like training and mentoring available on Brexit from LEO?
Yes. Your local LEO will be able to offer both training and mentoring on Brexit and Customs. There are also Brexit themed events organised. Most of these are virtual so you can attend an event outside your county.
Local Enterprise Offices are running one Day ‘Prepare Your Business for Customs’ workshops throughout the year and they’re open to ALL businesses, across ALL sectors and ALL industries. Course outline and dates available from the LEO national website.
32. EI have a Free Customs Course delivered online?
Yes the Customs Insights Course is free – sign up via PrepareforBrexit.com – it says that it takes about 40 minutes but I spent probably 2 hours and it was time well spent. This is how the programme is described on the website:
- Overview: The online Customs Insights course helps businesses understand the key customs concepts, documentation and processes required to succeed in a post Brexit world.
- Who is it for: It is designed for Irish businesses dealing with customs for the first time.
- What will I learn: The course will give learners a firm understanding of customs, the implications for their business and the options from Revenue that are available to make the customs process more efficient.
- What will I achieve from doing the online course: The course includes a dedicated section illustrating the key actions companies can take to prepare for customs after Brexit and includes a summary of the resources available to support you.
The programme has 8 modules:
- Introduction to Customs
- Importing & Exporting
- Export procedures
- Making Customs Easier
- Comprehensive Guarantee
- Deferred payment account
- Get Brexit Ready – What next?
I learned a few things that I haven’t touched on in this article, such as;
- What is customs warehousing …
an authorisation issued by Revenue to provide cash flow relief to businesses who may wish to store non-EU goods without payment of duty and VAT until released for home consumption – very important for cash flow purposes.
And the definition and benefits of Inward and Outward Processing from a Customs perspective and that a Comprehensive Guarantee can take the form of a cash deposit
33. Enterprise Ireland has a self-assessment tool to assist companies to prepare for Brexit?
There are two tools on the PrepareforBrexit.com website and both are worth using.
1- BREXIT READINESS CHECKER
The Brexit Readiness checker asks a series of great questions and send you a personalised report with recommendations. I got back a 19 page report with recommendations.
I would describe the Brexit Readiness Checker as a very practical document to identify actions that your business needs to take.
2- BREXIT SCORECARD
The Brexit Scorecard also asks a series of questions but it has a different emphasis and could probably be described as more strategic. The website explains that This self-assessment tool is designed to be completed by members of a company’s management team that have oversight of all operations – e.g. CEO, CFO, COO etc. It takes approximately 15-20 minutes to complete.
I got back a 12-page pdf which addressed six specific areas:
- Business Strategy
- People & Management
AIB have an interesting chatbot type tool also on their website. I was wondering a little about some of the questions but the report that was subsequently emailed was very beneficial. So I would recommend spending the few minutes that it takes to complete.
34. Should I be talking to my bank?
Absolutely. Your bank has trained Brexit specialists who can talk directly to you about Brexit and have also published guides on every aspect of Brexit.
- The Bank of Ireland has a clear guide on the steps involved in applying to Revenue for a Comprehensive Guarantee (as mentioned in Q6 and Q29)
- Opening Sterling Bank accounts and managing Sterling transactions. BOI has an 8-page pdf on managing currency risk (more on this topic in next question)
- Loan Finance particularly the various Strategic Banking Corporation of Ireland (SBCI) loan schemes for both Brexit and Covid. For instance this page outlines how AIB has partnered with SBCI to provide customers with access to the SBCI Brexit Loan.
35. What is going to happen to the Euro/Sterling exchange rate?
In 2019, the Department of Business, Enterprise and Innovation published a guide to ‘Currency Risk Management for Irish SMEs‘ to highlight and provide guidance on how to manage exposure to foreign currencies. In the run-up to the referendum in 2016, the Pound was worth 1.32 Euros falling to €1.11 by the October following the vote. While Sterling gained 4.3% against the euro in 2017, it lost 1.8% in 2018.
This up/down fluctuation continued in 2019 with Sterling gaining 6% against the Euro while September 2020 saw a dramatic fall to €1.08 in line with stalling post Brexit negotiations and the continued impact of Covid in Britain.
So no prediction on the value of sterling in this answer. Most commentators agree that economic growth in the U.K. and Bank of England (BOE) monetary policy decisions will ultimately determine the GBP’s value in a post-Brexit Europe.
36. What does the Currency Impact Calculator on Prepare for Brexit.com do?
The Currency Impact Calculator is an interactive tool that estimates the impact an adverse change in exchange rates would have on your business profitability. The purpose is to assess whether or not foreign exchange risk is a critical issue for your company and guide your foreign exchange risk management strategy.
The Prepare for Brexit website explains that the model is currently set to show the impact of a drop from today’s £/€ exchange rate to a parity scenario, i.e. a scenario whereby £1 = €1. These inputs can be changed in the relevant cells.
37. What impact will Brexit have on food businesses?
IBEC and the SFA’s superb document, ‘Brexit: a guide for your business‘ states that two-way trade with the UK is estimated to directly support 400,000 Irish jobs. It highlights the trade exposure of Food in the figure below which is presented on page 10.
According to the recently published 2019 EU Trade Policy Review (WTO), the sector with the highest average tariffs is the dairy sector (32.3%), followed by sugar and confectionery (27.0%), meat (19.0%), cereals and preparations (17.2%) and fruit and vegetables (13.0%). Concerning non-agricultural products, fish and fishery products (11.8% on simple average) and clothing (11.6%) are the sectors with the highest tariff protection.
The Food sector also faces non-tariff barriers as discussed in Q7. If you trade in Agricultural goods, and particularly those goods are of animal origin, then additional veterinary checks and certs will be required along with additional timeframes for notifying customs of imports. You will also need to ensure to be registered with DAFM and comply with new UK import requirements.
This Irish government webpage on the Agri-Food sector provides a great starting point to avoid serious disruption to your business while the Bord Bia website has a Brexit Hub which includes a webinar recording of an event entitled, ‘Brexit Actions to take: Less than 100 days to go‘ which includes presentations from Bord Bia, BDO and the Bank of Ireland covering customer relationships, supply chain, customs and controls, financial resilience, business continuity and market diversification.
38. Will the UK continue to be covered under mobile phone roaming?
No but hopefully yes. This issue is addressed under the National Brexit Readiness action plan under Connectivity, Transport and Travel
At the end of the transition period, access for Irish consumers to Roam-Like-At-Home in the European Union will no longer apply in relation to travel to the UK. Mobile operators will as a result be able to apply a surcharge on roaming customers. This will include in relation to travel by Irish consumers to Northern Ireland. The majority of telecommunication operators have indicated their intention to continue with the present regime after December 2020, this however could be subject to change over time.
39. How will driver licenses and car insurance cover be affected by Brexit ?
This issue is also addressed under the National Brexit Readiness action plan under Connectivity, Transport and Travel. After the end of the transition period, UK driving licences will no longer be valid for persons living in Ireland.
40. Is there a list of agencies to contact regarding Brexit?
The Department of Enterprise, Trade & Employment has published a very useful 3 page Brexit Readiness Checklist to include contact details for organisations to contact with regard to preparing for Brexit.
Your first stop is to find your local enterprise office here…
Enterprise Ireland published an 8-page pdf entitled Brexit 20 Frequently Asked Questions which I got by email in December 2020.
Q.14 is very interesting “Question: We import goods from China through a UK distributor. We pay import duties in the UK. What should we be aware of when importing those goods into Ireland?”. Q.16 highlights that EI have great advice available on establishing a UK company and trading presence.