Back in our March issue this year and with the UK in the Brexit transitional period, we ran a feature where we caught up a number of business representatives to find out their views on our post-EU Sheffield City Region.

As we edge closer to January  1, next year, the UK leaving the EU single market and customs union and the end of the transition period will affect citizens and businesses, as well as travel to and from the EU – travel that is already facing restrictions due to the global pandemic.

Along with the prospect of a ‘no-deal’ Brexit and the uncertainties and impact of COVID-19, businesses that deal with Europe will have to follow a number of new rules from January  1 2021.

With our international focus in this month’s magazine, unLTD’s Joe Bamford,  Mike Durham and Jill Theobald chatted to a number of leading industry figures from sectors including legal, accountancy, data security, insurance, and international trade to find out more about those new rules – and to explore the markets and wider potential opportunities beyond the EU and across the globe.

 

Nick Patrick, head of Sheffield International Trade Centre

Back in the March issue of unLTD, I warned that by August ‘companies all over the UK are going to be smelling the Brexit coffee and scrambling to HMRC and won’t be ready by the time January comes.’

As we’re now into November, the Brexit coffee smell must be overwhelming and the pot nearly boiling over for businesses – but my concern is that many still aren’t prepared and ready.

Sheffield Chamber is running a series of online Q&A sessions for Sheffield City Region (SCR) importers and exporters post EU transition period and so here I will outline a few key areas to consider.

While the Q&A sessions are very helpful for companies to understand how the UK leaving the EU Customs union and single market will affect them in general, each organisation, their products, values, customers and countries they sell to differ.

To address these issues, we are running bespoke ‘End of Transition’ audits on companies which looks at their individual activities and calculates exactly what they need to do in preparation for themselves, their customers and their suppliers.

How do I export goods to the EU from January 1?

Firstly, International Commercial Terms (Incoterms) which are legally binding will be implemented and secondly declarations will have to be submitted to UK Customs for the export of the goods and the import into the country they are entering.

If an exporter to European customers and you deliver the goods to their warehouse on the continent, the Incoterm will change to a DDP term (delivered duty paid) and the exporter will have to submit the export declaration to UK Customs then submit the import declaration to the customs at the border point of import. You will need to pay VAT and duty and may not be able to reclaim VAT.

Our recommendation is to speak to your European customers now and explain that from January deliveries to them will need to change to a DAP (delivered at place) Incoterm meaning that while you can still deliver to their warehouse, the buyer is responsible for the import declaration, and paying any duty and VAT.

If your buyer has agreed to arrange the goods to be picked up from your UK warehouse, please do not use Ex Works, ensure the incoterm used is FCA (Free Carrier), in this way the exporter of record (you) must do the export declaration.

How do I import goods from the EU from January 1?

A very similar process, but the other way around. Explain to your suppliers from January if they are delivering to you in the UK, declarations will be needed, both for the export out of their country and the import here.

The EU supplier will need to do the export declaration when the goods leave their country as well as the import declaration when the goods travel through UK customs , paying VAT and duty and will not be able to reclaim that so they will need to use DAP (delivered at place) Incoterm.

The UK importer will do the import declaration, pay the VAT and duty and claim back through quarterly VAT returns – you can read more about VAT and duty in the article later in this feature by BHP Accountants.

If you as the buyer have agreed that you will send your vehicle to pick up the goods in Europe, then ensure the incoterm used is FCA (Free Carrier), in this way the exporter of record (your supplier) must do the export declaration.

How will my relationship with my EU customers change after January 1?

For 47 years we’ve been able to export to, for example, Germany as if it was Birmingham or Cardiff. But from January there will be Customs procedures which will create disruption to your European customers.

I want SCR exporters to understand that impact and contact customers now. I am seriously concerned if they don’t explain all of the above and the difference in costs, come mid-January once the European customer receives deliveries and discovers they’ve got to pay more and there is increased paperwork involved, too, they will simply find a European supplier and our businesses will lose out.

Bear in mind, too – if your customers only trade in Europe they will know even less about what’s going to happen to them than we do. This is a really serious issue that I don’t think all UK exporters have taken on board.

Can you explain what Customs Declarations means?

Goods that travel around the world need to have customs control procedures, part of which are the import or export declarations. Anything that leaves the UK must be declared to Customs so you must complete the necessary forms to clear the goods for export.

Import declarations are required as well and that’s where customs make their money – the duty. While we were in the Customs Union any goods that came into the EU from outside Europe had to be declared at point of entry but could then have free circulation around Europe. But from January, we will be regarded as the rest of the world – anything we ship into Europe will need to be declared at the point of entry.

Businesses need to speak to the freight forwarders to confirm whether or not the freight forward will be able to undertake the customs declarations from January 1. Currently around 55 million import and export documents are submitted to HMRC every year.

Once declarations are needed for all European trade, by the end of 2021 that will be in region of 300 million – a startling statistic and a massive amount of work for freight forwarders who may have to increase their administration staff numbers significantly to accommodate.

How will Incoterms work with European trade?

If nothing is discussed with customers and suppliers, then in January the Incoterms will automatically become DDP or Ex Works (EXW) – and neither of those will be suitable for European trade, unless you, your customers or suppliers are aware of the responsibility and consequences.

If you’re exporting (and delivering) to customers in Europe, we recommend DAP instead of DDP. If you’re picking the goods up from your EU supplier or if your EU customer is picking the goods up from your warehouse, we recommend FCA (Free Carrier) instead of Ex Works (EXW).

Sheffield Chamber of Commerce is an authorised Customs Intermediary and also an approved economic operator (AEO) – we have a fully trained team of Customs brokers so we can handle the import and export declarations for any company that wants to use us as their broker.

For more information please contact customs@scci.org.uk or call 0114 201 8888

Matt Bruce, CEO Bruce and Butler

The GDPR is an EU Regulation and, in principle, it will no longer apply to the UK from the end of the transition period.

However, if you operate inside the UK, you will need to comply with UK data protection law. This is the Data Protection Act 2018 (DPA 2018), which currently supplements and tailors the GDPR within the UK.

The government has said that it intends to incorporate the GDPR into UK data protection law from the end of the transition period – so in practice there will be little change to the core data protection principles, rights and obligations found in the GDPR.

Keeping personal data flowing

If you are a UK business or organisation that already complies with the GDPR and has no contacts or customers in the European Economic Area (EEA), you do not need to do much more to prepare for data protection compliance at the end of the transition period.
If you are a UK business or organisation that receives personal data from contacts in the EEA, you need to take extra steps to ensure that the data can continue to flow at the end of the transition period. The UK government has stated that transfers to the EEA will not be restricted. So if you send data from the UK to the EEA you will still be able to do so and you don’t need to take any additional steps.
If a business or organisation in the EEA is sending you personal data, then it will still need to comply with EU data protection laws. You will need to take action with them so the data can continue to flow. For most businesses and organisations, SCCs (Standard Contractual Clauses) are the best way to keep data flowing to the UK.
If you are a UK business or organisation with an office, branch or other established presence in the EEA, or if you have customers in the EEA, you will need to comply with both UK and EU data protection regulations at the end of the transition period.
In most cases you will also need to appoint a suitable representative in the EEA. This person will act as your local representative with individuals and data protection authorities in the EEA. You need to find a provider in the EEA who offers services as a GDPR representative – if you have one, this cannot be your Data Protection Officer (DPO).

.eu domain website

From 1 January 2021, you’ll no longer be able to register or renew .eu domain names if your organisation, business or undertaking is established in the UK but not in the EU/European Economic Area (EEA), or you live outside the EU/EEA and are not an EU/EEA citizen.
If you no longer meet the criteria, you should discuss with your local domain name registrar whether to transfer your internet presence to another top-level domain. Examples include .com, .co.uk, .net or .org.
Your registrar will be able to offer advice on how to let your customers know that you’re moving or have moved to another domain, such as a holding page to redirect web traffic towards a new domain, or advice on how to update your search engine optimisation.

Kiley Tan, Mosaic International

The World Bank and IMF are predicting that by 2024 Asia will have four of the top five largest economies in the world.

One of the greatest economic changes in the last 20 years has been the ascendency of China, but the prediction here goes beyond that and may well see the focus shift away from the North Atlantic to the Asia-Pacific region.
We are also set to see considerable upheaval for the UK economy with the prospect of a ‘no-deal’ Brexit becoming an ever-increasing possibility, the uncertainty of the pandemic and an unpredictable and increasingly protectionist United States.
With all of the above in mind, planning is critical to success, and it is not too late to start considering the Asia-Pacific region, and more specifically South East Asia with markets including Thailand, Malaysia, Singapore and the Philippines.
Traditionally we have sourced from the countries nearest to us – the EU. But our trading relationship with the EU, while very important, is a red herring. Of course, Asia is not the only market but given the growth and GDP forecast, it needs to be on our radar.
To maximise our ability to do business in the growing Asian economies, I often say you ‘need to be in to win it’ – but against a backdrop of great upheaval in international air travel we need to consider how that is going to impact both ongoing operations and future business.
With air travel restrictions likely to continue for some time, logistics will be very important. So, you need a place that allows you quick accessibility, and fairly cost effective – markets like Malaysia and Singapore. The latter strategically located at the tip of the Straits of Malacca, one of the busiest shipping lanes in the world.
For us in the Sheffield City Region we need to start thinking strategically – how do we access that economic growth in Asia? Do we start operations in those countries or have strategic partnerships with them? Look at the multinationals already there like Dyson, why did they move their HQ there?
Because they anticipate the growth in that region and it’s cheaper to run operations there, with a skilled but relatively lower cost labour force and raw materials.
Why not target India, China or Indonesia directly? Well, they are huge countries and the choice of your base there is staggering because of the scale. Singapore, however, is an island.
Malaysia has two major commercial cities (and cheap land to expand). Perhaps more importantly, English is widely spoken and the legal systems are similar to that in the UK. There are also a large population who speak Mandarin, Bahasa Indonesia and Tamil. With that in mind, most Western companies look at them as a natural match for entering Asia.
In the current pandemic, establishing and developing future business or maintaining existing relationships will be difficult without being able to physically travel to these locations. A lot of business in Asia is done over dinner – we love our food! So how do you to find and build rapport quickly beyond just breaking bread?
Now, more than ever, our region’s businesses need to have someone who knows the culture and the countries to be their ‘sherpa’ and that’s how I view Mosaic International – I can guide people through that journey avoiding mistakes.
There’s a level of expectation in some UK businesses of how things are done, and while there are similarities, there are also cultural gaps which need to be bridged. These cultural gaps exist between the UK and the EU but they are much bigger when it comes to Asia.
People want to do business in Asia but while they might get a supplier overnight, in my experience that’s rare. It takes time for that trust to develop.
Our region’s businesses need to be looking to establish and develop these relationships with Asia now. Because whether or not there is a Brexit deal – and I wish with every bone in my body we do get one –we need to have a paradigm shift because the growth markets are on the other side of the world.