Getting ready for Brexit transition doesn’t have to be a nightmare before Christmas. Over the next two weeks, beginning 8 December, we’ll guide you through 5 important Brexit checks, so you’re feeling more informed and prepared when Big Ben bongs 12 on 31 December.
The challenge
Currently most UK regulations are recognised within the EU and vice versa. From 1 January 2021, the EU is most likely to treat data transfer to and from the UK in the same way that it does other non-EU countries. Non-EU countries that wish to transfer data without restrictions, subject to GDPR compliance, from the EU are subject to adequacy decisions by the EU.
Why's that important?
The EU should have already begun its adequacy assessment of the UK and it’s hoped that it will make an adequacy decision on the UK during the transition period, providing all the conditions are met, but this is not guaranteed.
If an adequacy decision is not made, GDPR transfer rules will apply to any data coming from the EEA into the UK. To comply with these rules, you may have to take steps to put GDPR safeguards in place to ensure that data can continue to flow into your company in the UK from the EEA.
Client’s concern: Zoom Abroad
Zoom Abroad is a growing tech business which helps place international students with UK universities.
Abhishek Nakhate, the company’s founder and CEO thinks Brexit could offer opportunities for his company. But he is unsure of how changes to GDPR might impact his business:
‘We are planning on offering our service to EU students to help them apply to UK universities. Currently, we only work with students from Asia. We will still need to adapt our business to this new opportunity.'
'We are likely to need help with EU regulations and GDPR-related adaptability, because we are keen to know if there will be any changes after Brexit.’
Solution
- Keep up to date with changes to UK data protection law after Brexit by regularly checking the UK Information Commissioner’s Office (ICO) website.
- The government is advising some UK data controllers and UK data processors to appoint an EEA-based representative: check if this applies to you.
- Even if you don’t transfer data to and from the EU, review where your data is stored. You may discover that your third-party cloud computing supplier hosts your data in the EEA.
- If this is the case, move your data to the UK during the transition period. You don’t want your data to be stuck in a data no-man’s land in the event of a no-deal Brexit. Assess which regulations impacting your business could change: industry bodies are a good starting point.
- Contracts and other paperwork may need to be revised post-Brexit. Assess whether your privacy rules, terms and conditions, contracts and other documentation need revising to reflect post-Brexit data protection laws and other regulations.
Learn more about the impact of Brexit on GDPR
- GDPR & Brexit: What Does It Mean For Business?
- Have You Appointed Your EU Representative For GDPR yet?
Check 2: Reducing risk to your cashflow
The challenge
Additional stockpiling and storage costs – to cover potential delays at the borders as the UK gets to grips with life after Brexit – along with new tariffs, potential price increases, COVID-19 associated dips in revenue, and currency fluctuations could all make a big dent in start-up finances.
Why’s that important?
It goes without saying that a positive cashflow is the lifeblood of any business, however large or small the organisation. If the pandemic has scuppered your original cashflow forecast, or you’re seeing slower payments from clients – equally, if you’re being increasingly pressured by creditors – at a time when you need to prepare for extra outgoings or a fundraising round, now is the time to act.
Business Concern: Enterprise Nation
Founder of Enterprise Nation, Emma Jones, commented on the importance for businesses to show resilience, ensuring investors remain interested even if your cashflow forecast has seen better days:
'One thing we've seen during the pandemic is resourceful companies pivoting and diversifying at pace. For example, bars and restaurants delivering take-aways and drinks packages to people's doors. A recent survey we carried out found 63 per cent of small business owners wanted to increase diversification. These new income streams will continue to be vital as we head out of the crisis.'
'It's very likely investors and lenders will be looking for evidence of robust financial planning and firms that can adapt quickly. For those looking to raise growth capital right now, demonstrating you can handle a crisis well, will be vital.'
Solution
- Consider locking in currency prices at current rates
- It is important to review any new finance arrangements are appropriate for your requirements and have the right risk profile for your business
- If you’re embarking on a fundraising round, make sure that your forecasts are transparent but also show a recovery strategy if needed. There’s no harm in producing several forecasts to account for additional unforeseen costs that could crop up in 2021. That way, your investor knows that you have every possible circumstance covered
- If necessary, speak to your bank or finance lender about finance options for temporarily increasing your cash flow
See what you can do to boost your cashflow:
- Guide to small business grants and how to access them
- Negotiating a commercial loan agreement: What you need to know
- Bridging finance for small businesses: The Basics
Check 3: Staffing – Hiring people after Brexit
The challenge:
A new points-based system for sponsored workers will be coming into effect from 1 Jan 2021. This will cover EU and non-EU migrants alike.
Why’s that important?
Any UK-based employees who are citizens of the EU, the European Economic Area (EEA) or Switzerland, must register for settled status to continue living and working in the UK six months after the end of the transition period on 30 June 2021.
Client concern: Tummy2Mummy Midwifery Services
As the owner of Tummy2Mummy, Donna Grant runs a team of qualified and experienced midwives, sonographers, and health care professionals. They provide baby scans, antenatal, postnatal and midwifery services.
For Donna, ensuring she can have the very best staff to deliver these services is central to her business and she wants to know what impact Brexit could end up having on recruitment:
‘Although the majority of my staff are recruited from the UK, I am always looking to try and secure the very best employees, wherever they are from. I want to know if, after 1 January, people living outside of the UK will still be able to work for me. And I am keen to find out how the new rules will impact on any non-EU workers we have in the business. At the moment, trying to navigate Brexit as a small business owner is very difficult and it feels confusing.’
Solution
- Check to see if all your staff can continue to live and work legally in Europe post-Brexit. Ensure any affected staff apply here
- British nationals working in Europe need to be able to continue to legally work there too
Learn more about the new points-based immigration system:
- How to prepare for the UK points-based immigration system
- EU settlement scheme FAQs
- Tier 1 UK entrepreneur visas: Guidance & FAQs
- Can a business make a sponsored worked redundant?
Check 4: Taxes and Tariffs – Preparing for changes in taxes and tariffs
The challenge:
From 1 January 2021, you must have an Economic Operators Registration and Identification (EORI) number to move goods into or out of the EU.
Why’s that important?
Because all goods imported to the UK will need to be subject to UK Global Tariffs from 2021. As a business owner, you need to find out what these will be.
If the UK leaves the EU without a deal, there will be new tariffs on many goods and services that are exported from the UK to the EU. Even if a deal is agreed, there may still be tariffs to pay on some traded items. Those goods that we export to the rest of the world that are currently subject to EU-negotiated tariffs will be subject to new duty rules too, many of which have yet to be agreed.
Client’s concern: Manas AI
Manas AI is an AI-powered customer retention, insight, and trends company. Their technology helps companies to retain their customers by identifying patterns of churn behaviour in customer data, interactions, and conversations. They also help companies spot issues and trends early on. Manas AI founder and CEO Rahul Chakkara believes the impact of changes to taxes and tariffs is a real area of concern:
‘Currently, exporting services to EU customers is straightforward and simple. If barriers and tariffs are put in place, it will increase our business costs and could reduce our competitiveness.’
Solution
- Register for an EORI number – this usually takes a week
- Monitor announcements about new global tariffs that could apply to your goods
- Review your current commercial contracts to understand your commitments and how the different Brexit outcomes may impact them
- Consider whether employing a customs agent to fill out customs declarations could be cost and time-effective
- Check if you will have to register for VAT in EU countries that you work in – an accountant with EU experience will be able to offer more advice
Learn more about post-Brexit trade:
- What will trade look like with a no deal Brexit?
- Should I set up an EU base to ease post Brexit trade?
- The small business VAT guide
Check 5: Supply chain - Ensuring a resilient supply chain
The challenge:
Start-ups must audit their supply chains to check which goods or services are procured from the EU.
Why’s that important?
The fact that the UK government has had to employ thousands of new customs agents confirms for many that there will inevitably be a raft of new paperwork and regulations to untangle. The last thing any business wants is for procurement to be stalled. So now is the time to check through each and every link in your supply chain to see where the weak spots are. Do they expect any delays? Will they be stockpiling? Will you be bearing the brunt of their tariff increases? It’s important to check the detail, and to ensure your interests are protected as part of each supply of goods contract you have in place.
Client’s concern: Twipes
Forbes 30 under 30 entrepreneur Elle McIntosh is the co-founder of Twipes, a company that makes biodegradable wipes. She fears Brexit will have a big impact on her firm’s supply chain and is urging ministers to be transparent:
‘As a business, we believe that there will be massive changes in terms of production and manufacturing. By having European suppliers, there’s potential to incur high import tax. We have taken steps to tighten our supply chain and bring it closer to the UK. But we would love help from import lawyers to get answers about how to operate within the EU and with European clients when Brexit hits. Many start-ups are kept in the dark when it comes to knowing what is to come.’
Solution
- Familiarise yourself with all your contracts
- Do you know what will happen if certain clauses get activated, and will they work in your favour?
- Speak to all of your suppliers and service providers about their plans for Brexit
- Ask whether your suppliers are stockpiling to cover any delays at the borders
- Find out if anyone in your supply chain will be putting their prices up to cover additional Brexit costs
- Where any links in the supply chain are found to be unprepared for Brexit, look for alternate suppliers
Learn more about imports and exports post-Brexit:
- How will Brexit affect imports and exports?
- A guide to Brexit & commercial contracts
- Contract lifecycle management: What you should be doing
Preparing for Brexit whitepaper: How our clients are getting ready
We speak to our clients who set out how Brexit will impact their business and the kind of support they are looking for. Business expert and best-selling author Emma Jones MBE reveals how the publication she founded, Enterprise Nation are standing up for small firms and start-ups and helping prepare their community for the changes to come. Peter Richardson, Founder of the LinkedIn Better Business After Brexit group, shares his thoughts on why it’s vital SMEs get the legal advice they might need to get ready for Brexit.
