Adieu, adios, ahoj – whichever language, the word is final
So the general election is now behind us and Brexit once more takes centre stage. As Boris is saying, it is full steam ahead on the Brexit front.
While the Brexit date is 31 January, the end transition date (31 December 2020) remains unchanged. During the transition period, current trading arrangements between the EU and UK will continue. The idea is to give time for a new deal on the future trading and political relationship between the EU and UK to be worked out after the UK leaves.
The UK will continue to abide by the EU’s rules and be subject to the rulings of EU courts but will have no voice at the EU table. In fact, the transition period may even be extended until as late as December 2022, but only if both sides agree. The can has been kicked down the road, but there isn’t much road left.
New trade tariffs
Contrary to popular belief, in the absence of a trade deal come December 2020, the UK will not move to World Trade Organization rules. Instead, different rates of customs duty on imports into the UK from the EU27 and the rest of the world will apply, set by the UK government.
Importers should therefore negotiate with suppliers sooner rather than later, as tariffs will be based on the full market value of the goods and services. Importers will be responsible for using the correct commodity codes. They should ensure the necessary procedures and controls are in place to avoid delays at ports. Importers should have a contingency plan: allow time to make the necessary adjustments and train staff, and prepare for cash flow interruption.
People and management
Businesses with employees from the EU27, Switzerland, Norway, Iceland or Liechtenstein should check if they and their families need to apply to the settlement scheme.
UK companies with their seat in the EU27 – the seat is where the management takes place and where its decisions are transformed into the day-to-day activities of the company – will lose their current right to freedom of establishment after the transition period if there is no trade deal in place.
Instead, each EU27 member state will apply its own rules on recognising UK-registered companies. Limited companies could be treated as partnerships, meaning shareholders losing the benefit of limited liability and becoming personally liable for the company’s debts. Some might require a cross-border merger into a local limited liability company. Whatever a business’s restructuring needs, we can readily assist at local country level.
Take action. Jetzt, presto, maintenant – whichever language, the word is NOW!
Forward-thinking businesses are strategically evaluating their level of readiness for a no-deal. We have developed an analysis tool – BX360 – that provides a detailed breakdown of actions needed in the post-Brexit era. It dissects customs and tariffs, finance and taxation, legal aspects and contracts, and people implications to help businesses prioritise actions.
Visit our Brexit hub to see how Moore Kingston Smith can help.
Whichever language, Brexit means Brexit!