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Brexit: deal or no deal

12 Mar 2019

Brexit and what happens after 29 March is understandably one of the biggest concerns facing businesses, particularly those that ship products to the EU. With all the uncertainty, Hallmark Consumer Services offers our perspective on what a deal or no deal Brexit means for these businesses and how you can prepare for both scenarios.

Big Ben, BrexitNo deal Brexit

A no deal scenario will mean the UK will revert to World Trade Organisation rules on trade. While Britain would no longer be bound by EU rules, it would have to face the EU’s external tariffs. This means UK businesses may have to place tariffs on imported goods from the EU, forcing up the prices to the end consumer.

For those that export to the EU – which includes many of our clients – there will inevitably be tighter restrictions on products as well as custom controls. Businesses shipping to the EU following a no deal Brexit should therefore expect delays in the delivery of their products. This may also include shipping products to the Republic of Ireland, although it is still unclear if and what the Irish border would look like.

Hallmark is currently working closely with Royal Mail and Parcelforce to understand the implications of a no deal Brexit on shipping products into the EU. To avoid unnecessary delays at customs, parcel carriers have advised that all consignments are shipped with the following data:

  • Sender telephone number and email
  • Item details (description, quantity, weight and value of contents)
  • Country of origin of contents
  • Postage and insurance costs
  • Trade Tariff (Harmonised System or HS) code
  • Recipient telephone number and email
  • Importer details
  • Importer EORI Number (this is needed for trade orders)

Failure to provide this information will lead to delays and possibly penalty charges.

In addition to the above, you’ll also need to provide:

  • Customs declarations (CN23s)
  • Commercial invoices
  • All required data, via your shipping system

For Hallmark clients, you can rest assured that we’ll be working closely with you in the coming weeks to ensure you are covered for a no deal scenario and that our own fulfilment and distribution processes meet the necessary requirements for shipping your products to the EU.

For those that ship large quantities of goods to the EU it may be worth considering sending stock in bulk to a European fulfilment house for them to despatch. This could save costs and delays. Hallmark has a European fulfilment partner that we’ve been working with for a number of years to help businesses in this situation and we are pleased to be able to offer our clients the option of joining this partnership to help their operations become more efficient and cost effective in the EU.

Something else to consider with a no deal Brexit is EU transaction charges. Banks may impose additional charges for making and receiving payments from EU businesses and given that exchange rates are likely to be very volatile during the Brexit period, this could have a significant impact on certain businesses. While Hallmark are in close communication with Barclays Bank about this, we would advise all businesses to speak to their own banks and accountants for advice on this aspect.

The Brexit deal

If we get to 29 March with a Brexit deal we’ll move to the next phase which is the ‘transition’ or ‘implementation’ period. The Brexit withdrawal agreement sets out how the UK will leave the EU on 29 March 2019. In summary:

  • The transition period (which the UK government calls “implementation period”) begins on 29 March and lasts until December 2020.
  • The UK will need to abide by all EU rules, but will lose membership of its institutions.
  • The draft withdrawal agreement says the transition can be extended, but only for a period of one or two years (in other words up to the end of 2022 at most).
  • Both the UK and EU must agree to any extension and the decision must be taken before 1st July 2020

During the transition period, the UK will have left the EU and therefore will have no formal say in making or amending EU rules and regulations, but it will have to follow them to the letter. We will, however, remain in the EU’s economic zone – the single market – and their customs union. This will mean that frictionless trade without checks and delays at borders will continue.

The advantage of the transition period is that it will allow more time for businesses to prepare and adjust to the changes and for the government to agree trade deals with the EU to smooth the path out. The transition also gives the UK continued access to EU databases on crucial issues like security, while a future relationship is negotiated.

Essentially, for 21 months everything else will remain the same.

Ireland and the back stop

Currently Hallmark make 30 shipments a week into Ireland and the backstop seems to be where all of the political arguments are focused.  This is our current understanding of the backstop:

  • If no long-term trade deal has been agreed by the end of 2020 that avoids a hard border between Northern Ireland and the Republic of Ireland, and if there is no extension to the transition period, then a backstop consisting of “a single customs territory between the EU and the UK” will be triggered.
  • Northern Ireland will be in a deeper customs relationship with the EU than the rest of the UK; it will also be more closely aligned with the rules and regulations of the EU single market.
  • As long as the backstop is in operation, the UK will be subject to “level playing field conditions”, to ensure it cannot gain a competitive advantage while remaining in the same customs territory.
  • The UK cannot leave the backstop independently, it needs to be decided with the EU.

Our advice

Clearly nobody knows as yet what shape Brexit will take, but it’s important for businesses who ship products to the EU to prepare for both eventualities to minimise any disruption. Hallmark can help you plan ahead to ensure you have the most robust systems and processes in place for fulfilling orders and shipments to the EU in the most efficient and cost-effective way for your business.

To speak with one of our friendly client account managers about preparing your business for Brexit, please get in touch here or call 01664 485 000.

Further information

Some useful advice and information about preparing your business for leaving the EU, including what to do if you employ EU citizens, can be found here: https://euexitbusiness.campaign.gov.uk

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