Preparing for the Future Relationship with the EU

***Updated 31 January 2020*** 

Although the UK has already left the EU, negotiations on the future relationship for the UK and EU are still being finalised, businesses of all sizes should continue to take practical steps and ask questions in order to prepare for whatever kind of future relationship or not lies ahead.

From the 31 January 2020 until 31 December 2020 the UK will be in a transition period, sometimes called the transition period, with the EU whereby the UK will continue to follow all the rules, laws and regulations from the EU until the 31 December 2020.

Before 1 January 2021, the UK and EU will need to have an agreed set of arrangements for future trade which will outline how the future relationship between the UK and EU will work.
There is a risk that that UK and EU may not reach a negotiated outcome or come to a partially negotiated outcome on 31 December 2020. Therefore businesses should still continue to prepare for these outcomes, by understanding how having no future trade deal with the EU might affect their own operations and employees, as well as their suppliers and customers. See government guidance on preparing your business for Brexit.

You can find further Brexit readiness documents produced by Sharing In Growth including webinars on the movement of people, goods and data regulations post Brexit on their website.

Actions to consider now

  • Visit the new gov.uk landing page to review actions you may wish to take during the transition period that are not dependent on the outcome of negotiations.
  • Businesses are required to register for an EORI number to be able to continue to move goods between the UK and EU from 1 January 2021 following the UK’s exit from the EU and must also ensure there is a capability to submit customs declarations for EU trade.
  • HMRC are automatically allocating businesses with an EORI number that starts with GB if they have not registered for one but their company is VAT registered. If your company is not yet VAT registered with HMRC and you wish to trade, you will need to do this before you register for an EORI number.
  • Talk to your bank now about addressing potential cash flow or working capital problems.
  • Apply through EASA for third country approval to allow products to continue to be recognised within the EASA system in if a deal is not agreed and ratified by 1 January 2021. Visit the early applications section of the EASA website.
  • Ensure any EU27 citizens you employ have applied for the EU Settlement Scheme.
  • Work with customers so that you can continue to comply with contractual terms (i.e. data protection, guaranteed delivery times or nationality restrictions on sensitive contracts). Please consult the ICO’s ‘six steps’ checklist for more information.

As the UK moves closer to leaving the EU, there are very tangible steps ADS Members must take – including on your EU workforce, regulatory regimes and customs regimes – to be prepared for the changes Brexit will bring.

Download sector-specific advice and guidance on preparing for Brexit:

Prepare for full customs compliance and costs which may come into place at the end of the transition period.

Currently, trading with business in the EU27 requires the same paperwork as trading with businesses in the UK. From 1 January 2021 at the end of the transition, UK companies exporting to or importing from the EU will have to make additional customs declarations and prove goods comply with EU or new UK regulatory standards, which may look something like the current requirements for trading with the rest of the world. It is therefore important for members to familiarise themselves with these processes.

Questions to consider:

  • Do you currently only trade with the EU?
  • Will continuing trade with the EU be your first experience of importing or exporting?
  • What customs procedures do you currently comply with compared to potential new ones?
  • What is the cash flow impact arising from import duties and unrecoverable VAT?

Actions to consider:

Assess exposure to customs checks & delays at the UK-EU border

As part of the UK leaving the EU, from 1 January 2021, UK businesses moving goods across the UK-EU27 border will need them to be declared for customs purposes.

Many UK and EU27 ports lack the physical and technological capacity to handle increased customs checks, which could result in delays at the UK-EU border.

Questions to consider:

  • How resilient is your supply chain to border delays?
  • Do you have contracts with penalties for late delivery?
  • What would be the cost of warehousing spare stock or components?

Actions to consider:

  • If possible, businesses may want to renegotiate commercial and delivery terms to reflect any changes in customs and excise procedures.
  • If renegotiation is not possible, businesses should assess their ability to comply with contractual terms and ways to ensure compliance of goods to avoid  order delays.
  • Businesses should talk to their EU customers and suppliers to ensure all parties are preparing for changes and the new treatment of UK businesses and UK goods.

Useful resources:

  • Government guidance on preparing for changes at the UK border if a deal is not agreed and ratified by 1 January 2021

Assess dependence on EU regulatory regimes

One of the critical issues the UK and EU27 face is the relationship the UK will have with EU agencies and regulatory bodies, including the European Aviation Safety Agency (EASA) and the EU REACH regime. While we wait for the UK and EU to state their opening position on these relationships, you may wish to consider the following questions.

Questions to consider:

  • If the UK diverged from EU regimes, what would it mean for you, your suppliers, and your customers?
  • Have you assessed the potential impact on your operational capability if EASA and REACH certification cease to apply?
  • Are you applying for new certifications or approvals which have been published by both the EU and the UK to maintain a degree of continuity if a deal is not agreed and ratified by 1 January 2021.

Actions to consider: Third country approvals from EASA

As part of the EU mitigation measures, EASA has opened an early application system for UK aerospace companies to obtain Third Country approvals, which will allow products to continue to be recognised within the EASA system if a deal is not agreed and ratified by 1 January 2021. Many UK companies have already applied and obtained Third Country certification, but any aerospace company which has yet to do so should read the latest guidance on gov.uk. Further details can be found on the early applications section of the EASA website.

Useful resources:

The government continue to publish guidance papers to business with practical advice on how to prepare if a deal is not agreed and ratified by 1 January 2021:

Understand your workforce

As part of the Withdrawal Agreement, the UK and the EU have agreed on the rights of EU27 and UK citizens’ post-Brexit. The rights and status of EU citizens working in the UK and of UK citizens working in the EU27 will differ depending on their current immigration status.

In terms of your own workforce, companies can start preparing by asking the following questions:

Questions to consider:

  • What proportion of your employees are from the EU27 and what will their status be post-Brexit?
  • Are they in critical roles?
  • Could you adequately recruit replacements if you had to? Will new recruits require sponsored working visas?

Actions to consider:

  • Consider what ‘right to work’ checks (e.g. passport and/or national identity card) apply until the end of 2020.
  • If you are an EU citizen, or you employ EU citizens, please apply to the EU Settlement Scheme to ensure the right to continue living in the UK after 30 June 2021.
  • You may wish to signpost the information that the Government is providing to your employees.
  • Ensure you and your employees follow FCO travel advice for applying for work visas in EU27 countries.

Useful Resources:

  • An EU Q&A on the rights of UK and EU27 citizens’ post-Brexit can be found here.
  • EU Settlement Scheme employer toolkit should equip employers with information to support the EU citizens and their families to apply to the EU settlement scheme.
  • For more information on visas and immigration-related to work in the UK, visit here.

Invest in your competitiveness

Even though the final shape of Brexit is still unknown, UK companies are likely to face increased costs, for example new administration costs of moving goods across the UK-EU border. These new costs would be in addition to the existing global competitive pressures to increase production, improve productivity and cut back costs.

Participating in programmes such as NATEPSC21, SC21 Competitiveness and Growth or Sharing in Growth will help make your company globally competitive regardless of the shape of the final Brexit deal.