Preparing for a ‘No Deal’ Brexit

WITH the Brexit deadline fast looming, at the very minimum businesses should actively consider how their business model and processes would stand up in the event of a no deal Brexit on 29th March. So, what practical measures should business owners take?

Supply chain management

In the event of a ‘no deal’ Brexit, the flow of goods that originate from EU member states is likely to be disrupted, particularly in the short term. This will damage sensitive supply chains and add extra costs and tariffs. To help mitigate, all businesses should liaise directly with suppliers to see what measures they have in place. You may think you’re unaffected if none of your product comes directly from the EU, however, have you considered which of your UK suppliers source their product from the EU? Understanding your extended supply chain is critical to ensuring the impact of a no deal is minimised.

VAT and Duty on Cross-Border Movements of Goods

A ‘no-deal’ Brexit outcome would mean that all arrivals and departures of goods to and from the UK will become imports and exports from a VAT and Customs Duty perspective. Currently, only goods whose origin or destination is outside the EU are considered “imports” or “exports”. Imports attract Import VAT – which is recoverable subject to the usual rules on VAT recovery – whereas Customs Duty is not recoverable.

Cash flow planning/funding

Carrying an increased stock and the cost of any additional Customs Duties requires cash. Understanding the cash flow impact of various scenarios (the impact of buying increased stock, the impact of a reduction in income due to a lack of product) is critical to being able to manage that impact.

Foreign exchange

Sterling continues to perform poorly against both the Euro and the US dollar and a no deal Brexit could see Sterling weaken yet further. Businesses seeking assurance could do much worse than investigate the benefits of a forward contract arrangement to give certainty to future cash outflows.

EU national employees

The UK government has sought to reassure EU citizens and their family members living in the UK that they are welcome to stay in the UK in the unlikely event of a ‘no deal’ scenario, and the UK will continue to run the EU Settlement Scheme for those resident in the UK by 29 March 2019 in a ‘no deal’ scenario. Make sure your staff are aware of their right to work and have made plans to register with the Settlement Scheme.

* If you’d like advice and support to help prepare your business for a potential ‘No Deal’ Brexit, please get in touch with Rohan Day, Partner, Armstrong Watson Skipton, on 01756 620000 or email