On 29 March 2019 the United Kingdom is set to leave the European Union after the referendum in 2016.
What is happening?
The ultimate relationship between the UK and the EU is still being negotiated, and will inevitably change the impact it will have on both retailers and the wider business landscape.
Even in the absence of a concrete agreement, there are certain areas that will undoubtedly impact retailers, among many other topics, particularly relating to the movement of goods.
Why does it matter?
Depending on the agreement struck between the parties (if any), there will be varying degrees of delays at the UK border. This will impact deliveries to locations and/or consumers, and will be a big risk for the delivery of any perishable goods. Retailers will also have to consider the allocation of risk when it comes to delays or the spoiling of goods and whether the company or its suppliers are liable for any additional costs.
Tariffs could also be introduced when importing goods to and from the EU, and delays will impact logistics costs. Inevitable fluctuations in exchange rates will also have potentially adverse effects on the cost of goods and their subsequent sale price.
Should the UK fully leave the EU Customs Union, goods that move across the border will have to go through the customs control process, including filing of the necessary paperwork.
Additionally, any goods entering the EU and then the UK would potentially be subject to fees and taxes at both borders, including duties and import VAT, which prior to this would only be payable when the goods entered the EU.
What action should you take?
- Continue to audit your supply chains and the risks associated with them. This includes the routes goods take, and any contractual relationships that underpin them
- Prepare strategies to mitigate any delays and/or fines, working with HMRC and register the company as an “Authorised Economic Operator” to benefit from quicker processing times
- Set up accounts and administrative processes that allow for the efficient processing of VAT and other customs costs with HMRC, and requisite paperwork for both imports and exports.