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IoD Guidance on Government's Brexit 'no deal' technical notices

29 Aug 2018

flagsIoD Guidance on Government's Brexit 'no deal' technical notices

Background

On 18 July 2018, the Prime Minister said that over the course of August and September the Government would publish “a number of technical notifications to set out what UK citizens and businesses need to do in a no-deal scenario”. 

Alongside the collection of notices, the Government has published an overview which puts the documents into context. The overview explains this exercise forms part of the Government’s plans to step up preparations for the possibility that the UK leaves the EU without a deal on 29 March 2019.It is expected there will be around 80 technical notices in total. Developing the documents has been a cross-Whitehall effort.

Publication of the first tranche of technical notices

The publication of the first tranche of technical notices was announced by the Brexit Secretary Dominic Raab on 23 August 2018. In a speech he said that although “a good deal is, by far, the most likely outcome” of the talks, issuing the documents is a “practical and proportionate approach” to preparing for every eventuality. 

The first tranche contains 25 technical notices spanning the following themes:

  • Applying for EU-funded programmes
  • Civil nuclear and nuclear research
  • Farming
  • Importing and exporting
  • Labelling products and making them safe
  • Money and tax
  • Regulating medicines and medical equipment
  • State aid
  • Studying in the UK or EU
  • Workplace rights

More technical notices are expected in the coming weeks.

Key takeaways from the first tranche of technical notices

By way of example we have selected a few of the technical notices that we believe are particularly relevant to our members and summarised key points below: 

‘Trading with the EU if there's no Brexit deal’:

  • A no-deal scenario would mean businesses would have to apply third-country customs and excise duties on goods moving between the UK and EU from Day One.
  • Some steps businesses would need to take when importing from to the EU: register for an EORI number if they don’t already have one (if only trading with the EU currently), consider whether to hire customs brokers / freight forwarders, determine the correct classification for goods, submit export declarations to HMRC, pay VAT and import duties.
  • Some steps businesses would need to take when exporting to the EU: register for an EORI number, consider whether to hire customs brokers / freight forwarders, determine the correct classification for goods, submit export declarations to HMRC, consider whether to apply for an export licence.  
    Businesses may want to consider using customs procedures, which include customs warehousing, inward processing, temporary permission and authorised use.
  • Further information and instructions specifically tailored to cover the actions that businesses would need to take in a ‘no deal’ scenario will be published in the coming months.

‘VAT for businesses if there's no Brexit deal’:

  • Should there be a no-deal scenario on 29 March 2019, the Government would aim to keep VAT procedures as close as possible to the way they currently are. 
  • UK VAT-registered businesses would be able to account for import VAT on their VAT return. Customs declarations and the payment of any other duties will still be required.
  • UK businesses exporting goods to EU consumers would be able to zero rate sales of goods to EU consumers, while UK businesses exporting goods to EU firms would continue to be able to zero-rate sales of goods to EU businesses.
  • For UK businesses supplying services into the EU, the main VAT ‘place of supply’ rules would apply. 
  • However, there are some areas where there may be changes. For example, UK businesses supplying financial services could potentially see input VAT deduction rules supplied to the EU changed.
  • UK business will no longer have access to the EU VAT refund system. UK businesses will continue to be able to claim refunds of VAT from EU member states by using the existing processes for non-EU businesses. This process varies across the EU

The government’s guarantee for EU-funded programmes if there’s no Brexit deal’:

  • As agreed as part of the Financial Settlement, the UK will continue to take part in all EU programmes post 29 March 2019 for the rest of the 2014-2020 Multiannual Financial Framework. This was signed off by both negotiating sides in the draft withdrawal agreement.
  • If the UK leaves the EU without a deal, the UK would cease participation in the EU budget upon exit day meaning UK organisations would no longer receive future funding for projects under EU programmes, such as the European Regional Development Fund and Horizon 2020.
  • However, the Government has committed to underwrite EU projects agreed prior to the UK’s departure from the EU, including in areas such as structural and investment funds under the current MFF cycle, the payment of awards where UK organisations successfully bid directly to the European Commission on a competitive basis while we remain in the EU.
  • This technical notice has a list of EU programmes and corresponding departmental contact information.  

‘Banking, insurance and other financial services if there’s no Brexit deal’:

  • In a no-deal outcome, the Government would put in place unilateral action in order to allow for as much continuity for firms as possible. Notably, this includes a commitment to establishing a Temporary Permissions Regime to enable EEA firms currently passporting into the UK to continue to do so for three years after March 2019.
  • The UK has also committed to legislation that ensures contractual obligations, such as insurance contracts, between UK customers and EEA businesses not covered by the Temporary Permissions Regime can continue to operate.
  • The Government will seek to provide financial services regulators with a transitional mechanism which will enable them to phase-in Brexit-related regulatory requirements, allowing firms such as those under the Temporary Permissions Regime time to adjust to new arrangements.
  • The Government has committed to working with European partners, such as the European Commission and the European Central Bank, to identify the risks of a no-deal scenario.
  • At this stage it is advisable that financial services firms plan on the basis of a transition period between March 2019 and December 2020 as well as continuing to follow guidance from regulators. 

Please note the technical notices cover a wide range of policy areas and business sectors in addition to the above. 

Many of the notices are likely to contain information relevant to your industry. For example, company directors in the medicines and pharmaceuticals sector should read the document on ‘How medicines, medical devices and clinical trials would be regulated if there’s no Brexit deal’, which explains the UK would continue to recognise pharmaceutical marketing authorisations from the European Medicines Agency by converting EU Centrally-Authorised Products (CAPs) into UK CAPs.

We encourage you to read through the notices to gauge information relevant to your business and supply chain.

IoD reaction to the technical notices

Responding to the publication of the first tranche of technical notices, Director General Stephen Martin called the move a “welcome step”. He added that although businesses would have liked to have had this guidance sooner, having sight of the information now will be in the interests of many firms that feel they have thus far lacked sufficient guidance to plan. 

The IoD is arguing that a no deal would be bad, but a no deal with no planning would be worse.

IoD guidance – ‘Business Planning for Brexit’

Don’t forget that the IoD issued no-deal guidance available exclusively to members in June 2018. Business Planning for Brexit, authored by Head of Europe and Trade Policy Allie Renison, sets out what trading with the EU as a “third country” entails. This will be updated to reflect technical notices and further progress on the Withdrawal Agreement

Feedback on technical notices

We are keen to hear any thoughts and feedback on the Government’s technical notices. If you are an IoD member and would like to tell us what you think, please email policy-unit@iod.com. 


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