The end of the Brexit transition period is now just weeks away.
At this late stage, we still don’t know if the UK will have trading terms resembling Australia’s, Canada’s or Norway’s relationship with the EU.
But whether a deal is agreed or not, very big changes to the way most British businesses operate are now inevitable.
The Government has spent billions of pounds preparing for Brexit including hundreds of millions on communications campaigns to make businesses aware of what they need to do. Yet thousands of businesses remain clueless about what is to come.
Giving evidence to the Public Accounts Committee last month, Alex Chisholm, Permanent Secretary to the Cabinet Office, told MPs about his fears that British businesses are unprepared for imminent change with the government’s own polling revealing a third of businesses still think there will be an extension to the transition period.
In addition to those burying their heads in the sand in the hope of an extension, others simply don’t know what is coming. Whether this is through Brexit fatigue, blissful ignorance, disinterest or any other factors, the result is the same, administrative headaches, reduced productivity and impacted balance sheets.
Yet the Government appears little better. Only last week the National Audit Office (NAO) highlighted that vital IT systems still haven’t been tested, transit areas for lorries are not ready and there is a substantial shortage of customs agents. The same report also highlighted problems with plans to maintain the supply of medicines.
The past few days have also seen a flurry of last-minute announcements that could easily have been made before now, announcements that will be significant for accountants and many of their clients. For example, after months of uncertainty, on 3 November 2020, HMRC finally confirmed that Enterprise Management Incentive (EMI) schemes will continue after the transition period ends.
However, even against the backdrop of governmental “challenges”, an unprecedented pandemic and significant economic shocks, it is not all doom and gloom.
Many professional, trade and membership bodies are doing their bit to make sure their respective sectors are ready. For instance, the British Chambers of Commerce offers specific customs help and advice via “Chamber Customs” their advisory and brokerage service. Many trade bodies supply their members with weekly updates about Brexit developments in an attempt to bolster Brexit preparedness – the Manufacturing Technologies Association (MTA) and the Society of Motor Manufacturers & Traders (SMMT) are good examples.
In the accountancy sector, most professional bodies have sought to ensure their members are ready, so that they in turn can maximise the chances of their clients being ready too. For example, AAT has long provided a wealth of Brexit related material via AAT Comment, CPD and technical information via KnowledgeHub, branch events on the subject, magazine articles, social media snippets and so on.
All of this Brexit information being provided by reputable sources, together with hundreds of millions of pounds being invested in government information campaigns, has helped to ensure that many businesses have a good understanding of what they should be doing. However, some of these same businesses, especially SMEs, simply don’t have the bandwidth to prepare when being confronted with a range of new Covid-19 lockdown obligations – in addition to the many pandemic related challenges they have faced over the past nine months.
For these businesses in particular, the help and advice of their accountant could be crucial. Agents should be asking some very simple but vital questions of their clients to make sure they’re as ready as they can be.
These include the basics such as making sure any of their clients with EU employees have checked that th hey are registered for the settlement scheme; asking if VAT changes are likely to affect them; and questioning whether their clients export or import to EU countries – and if so have they registered for simplified import procedures and how might additional customs duties and tariffs affect them?
There are a range of less obvious but potentially just as important questions. For example, in relation to the receipt of personal data from EU countries. GDPR ceases to cover the UK after the transition period. Although the UK has committed to replicate the requirements of GDPR in British law, as we will soon have “third country” status, the EU will have to make an adequacy decision about the UK. This decision could be made before the end of the transition period but equally it could be many months away. This means the transfer of data to the UK is only permitted if “appropriate safeguards” are in place. This includes inserting Standard Contractual Clauses into contracts before the transitional period ends. Fortunately, transfers of personal data to the EU from the UK remain unaffected but nevertheless, for some, this will represent an additional burden they could well have done without.
With just over 50 days until the transition period ends there can be no time for any business, small or large, to delay or offer excuses. There is still time to take action to avoid or reduce the disruption that our new relationship with the EU is going to bring, so check what needs to be done, take action today and advise clients to do the same.
Phil Hall is AAT’s Head of Public Affairs & Public Policy and a former lecturer on international trade at Lianyungang Technical University, Jiangsu, China.
Phil Hall is AAT's Head of Public Affairs and Public Policy.