Last night’s news that we are now a major step closer to a damaging no-deal Brexit will be extremely unwelcome to the vast number of businesses that will be affected by this decision. Months of chaos caused by Covid-19 have further disrupted supply chains, and provided a worrying preview of what we could have to come next year.
An industry survey we conducted in June 2020 found that 97% of businesses believe Brexit will lead to border delays – a serious area for concern, but this could be mitigated by the government’s decision to drop plans for full border checks on goods coming in from the EU initially. What’s more, the same proportion believe that this will lead to increased admin work around imports and exports, and 74% believe that the total cost of goods will increase as a result of Brexit.
Given that all of these impacts are likely to be worsened if we end up with a no-deal Brexit, what can be done to mitigate the impact exiting the EU will inevitably have on the supply chain?
Regardless of whether we eventually negotiate a deal or not – which is by no means certain - businesses should now be taking a hard look at their supply chains to ensure that they are flexible and agile enough to deal with any disruption that is thrown at them. How will you plug resource holes, should the worst occur? How will you ensure staff morale isn’t affected? How will you ensure your business strategy is compliant with new regulations and your supply chain is resilient enough to weather disruption?
As for other actions businesses can take, the first is to take this opportunity to review their Incoterms with customers and suppliers. Incoterms define who is responsible for transaction costs and duties, so will have a direct impact on a business’s cost and risk exposure post-Brexit.
Secondly, businesses that have not yet done so should register for HMRC’s Transitional Simplified Procedures. This will enable them to import goods into the UK without make a full customs declaration in advance, and also postpone paying duties and VAT.
Thirdly, it’s essential that businesses ensure they are aware of the relevant temporary product and tariff codes and customs processes that may come into force.
Dave Howorth, executive director, Scala
