Planning for Brexit is more urgent than ever

The uncertainty surrounding Brexit continues to concentrate minds. Many companies are only now starting to make preparations for a changed trading relationship with our nearest neighbour and largest trading partner. “On a daily basis, we are being contacted by multinational firms, SMEs, UK-based companies and many others asking what they need to do to get goods across the border after Brexit,” says PwC Global Trade and Customs partner, John O’Loughlin. “It is good that they are getting exercised about it, but they really are starting a bit late in the day.”

While some companies are continuing to struggle to come to grips with the implications of Brexit, O’Loughlin believes it is not too late for them to take action to mitigate the worst impacts. “There are three things they should do at an absolute minimum,” he says.

“The first is to get an EORI (Economic Operators Registration and Identification) number. This is a European Union registration and identification number for businesses who import or export of goods in or out of the EU. You can register for a number through Irish Revenue’s EORI online registration service. The second is to engage a customs agent or broker to act on their behalf. And the other is to put in place the financial arrangements to pay the duties which will be levied.”

That’s before looking at other aspects such as increased IT costs, VAT, customer and supplier relationships, warehousing capacity and storage costs.

The critical thing is to make sure goods can cross the border

“There is a lot of preparation required if companies are to be ready. It is a worry to find that many companies have still done nothing at all,” he adds. “It tends to be the larger companies which are coming looking for support.”

The lack of preparation is by no means universal, however. “There is a cadre of companies which have been planning for this for several years,” says O'Loughlin. “The more sophisticated companies are testing their assumptions to ensure their plans can be executed. They are examining the quality of their data, looking at stock levels, ensuring they have the resources in place to deal with all eventualities, putting stakeholder communications plans in place, and ensuring everyone in the supply chain is ready should the worst happen.”

There is also a growing realisation among those firms that aren’t so well prepared that only so much can be done in the time remaining before October 31st. “Businesses need to focus on what can be done,” O'Loughlin advises. “The critical thing is to make sure goods can cross the border. They have to make sure goods can get to where they need to go, in or out. After that they have to look at customs and duties and the financial impact on the business. This is not something companies can do on their own. Having a customs agent is critically important. They make customs declarations on behalf of clients. This is the equivalent of a tax return, and if you don’t have a broker to act for you, the goods won’t move.”

Companies who have left it late may encounter difficulties when it comes to finding a broker. “At present, about 1.5 million customs declarations are lodged each year and that’s expected to grow to 20 to 30 million following Brexit,” O’Loughlin points out. “What we are hearing is that there is very little capacity among brokers to take on new business. This lack of capacity is a worry. It’s the result of having been in the Single Market for so long. We have been a bit spoiled by that, and many of the skills required by customs brokers have disappeared.”

There is an urgent need for companies and state bodies to invest in the people and the resources needed to process and file these documents. “There is an immediate requirement for them to put that expertise and knowledge in place, but Ireland Inc is struggling with that.”

The actions business take now will not go to waste

O’Loughlin has a checklist of actions for companies who are just starting to prepare for Brexit. “The first thing to do is understand your supply chains. Where are the goods moving to and from? Are you an importer or an exporter, or both?”

Next on the list is the need to understand contractual obligations with suppliers and customers. “You should apply for an EORI; you can get one in hours from Irish Revenue. You need to try to engage a customs broker, set up the mechanisms to pay customs duties, ensure you are VAT registered to avail of the VAT postponed accounting regime, have the appropriate documentation in place to avoid delays at ports, and understand the non-tariff trade barriers which may apply to goods such as food and agri products and cause delays at ports and borders.”

These actions are the bare minimum, says O'Loughlin. “Companies can take action now. If they don’t, they run the risk of experiencing delays, which adds cost and disruptions to the supply chain.”

The effort will not be wasted, regardless of what happens or doesn’t happen in the coming weeks. “We advise companies to continue to plan for a no-deal Brexit,” he says. “Even in the best case scenarios, there will eventually be some form of customs control required for trade between Britain and the EU. It is wise to prepare for that now. In the most benign of circumstances, the UK will become a third country. The actions business take now will not go to waste, as they will be necessary at some point.”

For more information, visit pwc.ie