Preparing brewers for a no deal Brexit
The Government has said that the UK will be leaving the European Union (EU) on 31 October 2019. They have produced an online guide on how to get ready for Brexit, which provides advice on how you and your business can prepare.
There is still a good chance that the UK could leave the EU without a deal or with a ‘managed’ no deal. Below are eight things that all brewers should be doing to prepare.
The SIBA team has contacts in every major Government department. If you have a specific question not covered here, then please contact Barry Watts (firstname.lastname@example.org) who will refer you to the relevant Government expert.
1. Apply for an EORI number
See the Government website for more information.
If you export your beers to Europe, in the event of a no-deal Brexit you will need an EORI number to continue trading. We advise that if you haven’t yet done so, apply for one as soon as possible. EORI stands for Economic Operator Registration and Identification. It will allow you to interact with HMRC’s systems for export, customs, excise and VAT.
If you currently export your beers outside of Europe with the rest of the world, you should have an EORI number already and be familiar with the customs, excise and VAT processes it requires.
Around a fifth of SIBA members export their beers, with Italy, France, Sweden, Germany, Norway and Spain being the top destinations for UK craft beer. It takes around 10 minutes to apply, then you’ll get your EORI number by email, usually within 5 working days. But, given the volumes of companies that are applying, this may take longer.
In the event of a no-deal Brexit, without an EORI number you will not be able to sell your beers to the remaining EU 27 countries.
2. Seek out an export agent, or consider buying export software
To export beers to the EU after a no-deal, all UK businesses will either need to appoint an export / import agent or buy software which allow them to make export decelerations themselves. This software interacts directly with HMRC’s systems to make export declarations which clear the goods, pays the excise and deals with duty suspension. An agent with access to this software can also do this on your behalf.
We recommend brewers make enquiries with export agents as soon as possible if you export beers to EU countries now. In the event that a deal is reached with the EU before October – the transition period allows for continued free trade with the EU up until 2021. More info is contained in the HMRC presentation, linked below.
BIFA – the trade body representing freight forwarders has a membership list which brewers can search: https://bifa.org/member-search
3. Contact your haulier / exporter now
We advise brewers to contact the organisation that moves your goods (for example, a haulage firm) to find out if you will need to supply additional information to them so that they can make the safety and security declarations for your goods, or whether you will need to submit these declarations yourself. It’s good to speak with them now as they will be able to guide you to do anything else you may need to do.
4. Work out if your EU employees need help
All EU citizens will need to apply for settled, or pre-settled status which will give them the right to live and work in the UK. This process is now free. This is the case if we leave without a deal, or with a deal. All EU nationals will need settled or pre settled status. A timeline is included in the presentation below.
You, as their employer may not realise that they are an EU citizen because until now there was no requirement for you to know their nationality; just their right to work in the UK.
Applying for settled or pre-settled status is done via online application: https://www.gov.uk/settle-in-the-uk
Broadly, settled status applies to those who have been in resident in the UK for 5 years or more, pre-settled status for 5 years or less. Don’t forget about non-EU staff members who are married to EU passport holders whose residency is dependent upon their spouses settled, or pre-settled status.
As part of this process all EU Citizens will need to: prove their identity, show residence by 31 December 2020 and undergo a criminality check.
The European Union (Withdrawal) Act 2018: existing free movement rights would broadly continue after October until a new immigration system is introduced.
More information can be found on the Gov.UK website https://www.gov.uk/settle-in-the-uk
5. Look at your contracts
A no deal Brexit should not automatically mean your contracts with companies or suppliers in the UK, or in the European Union are terminated or changed. BUT… you may want them to.
More information is included in the SIBA presentation, linked below.
6. Consider protecting yourself with Foreign Exchange
If you have an agreement to buy a new piece of kit from China, or a large forward contract to buy US hops, or really buying or selling anything where there is a need for foreign currency, then you might need to consider hedging against significant exchange rate fluctuations with a foreign exchange product. Lots of companies offer these products but make sure they are registered with the Financial Conduct Authority (FCA).
7. Consider changing your labels
If the UK leaves without a deal, then any UK manufactured product exported to the EU would need to have an EU registered address printed on the can or bottle. This is so EU consumers can write to an address within the European Union with queries. This will mean you will need your UK brewery address, and an EU address next to each other. This could be a business premises of your EU distributor or importer who can handle any correspondence for you.
8. Read the Government partnership packs and technical guidance
The Government website has a lot of information dealing with specific and more detailed questions about leaving the EU without a deal. There is a lot of information available covering all these areas. This includes step by step guides for exporting and information on customs, duty suspension and VAT.
Government partnership pack: https://www.gov.uk/government/publications/partnership-pack-preparing-for-a-no-deal-eu-exit
HMRC’s presentation (29th January) explaining Customs, Excise & VAT in a no-deal