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Published:February 3, 2021

One-size-fits-none

Overcoming Brexit needs a customised response

One-size-fits-none

There are no Brexit quick fixes. And there is no "one-size-fits-all" solution. Each business faces its own challenges. Each business is able to potentially take advantage of different opportunities.

The good news is that Brexit bureaucracy can be effectively managed. However, each business needs to be carefully assessed on its own terms, as well as in terms of the broader regulatory environment. 

To appreciate why, let’s take a look at some of the variables involved in moving goods between the UK and EU.

 

Tariff free trade for some

The UK government heralded tariff-free trade as a win for British business. However, tariff-free trade depends on meeting rules of origin criteria, and therefore only applies to some businesses.

Firstly, not all companies are going to meet the RoO requirements. Companies that import goods and then sell those goods on to customers will not meet the criteria. Similarly, companies that use imported components to produce goods may not meet the criteria, either. 

Secondly, not all companies (especially smaller businesses) have the knowledge and capacity to prove RoO. They may even lack full clarity on whether or not they do meet the criteria. 

Securing tariff free exports to EU markets therefore requires identifying whether a company meets the criteria (or determining how they could meet the criteria) and then providing the necessary support to ensure they can demonstrate RoO at the relevant border. 

 

Volume matters

The costs and logistical implications of moving goods will also depend on the volume of each shipment. 

Corporations moving large volumes of goods may still be able to secure relatively competitive freight options. However, given the additional administrative requirements attached to each load of goods, many freight companies have ceased offering groupage freight as an option. Many smaller businesses are therefore finding it difficult to secure affordable shipping from the UK to the EU. 

Moreover, additional handling fees and administrative costs can badly affect margins on smaller shipments. 

 

An unhealthy relationship to paperwork

A similar dynamic is also at play when we consider agricultural products. 

With Brexit border control measures in place, shipments of agricultural goods need, in many cases, to be accompanied with the appropriate paperwork, including a health certificate.  

In the case of large shipments of goods, that may be just one more bureaucratic hurdle. However, when shipping individual food items to B2C customers, the costs (in time and money) may render the shipment too expensive to be profitable. 

Unsurprisingly, a number of UK businesses that wish to continue to supply goods to European customers are now considering fulfillment centres based in EU states. 

 

Managing the cash flow consequences of VAT 

How significant are upfront costs in terms of maintaining normal businesses operations? Well, it depends. Not every company has the capacity to manage cash flow shock of upfront VAT charges and additional tariffs. 

To  effectively manage the cash flow consequences of Brexit VAT, each company’s particular capacities and needs must be fully considered. That analysis will help determine which steps are required to help the company most effectively manage the Brexit cash squeeze. 

 

A tailored Brexit supply chain plan

re:TRADE powered by VAT IT is the holistic service that connects the dots between shipping, customs clearance, compliance and reclaim opportunities.

re:TRADE is leveraging our 20 years of experience and extensive contacts to tailor effective Brexit solutions for our clients.

Get in touch with re:TRADE to secure a thorough consultation about your business. We’ll carefully assess your business’s needs and develop a Brexit solution that meets your strategic goals. 

 

 

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