It is now six months since the transition period with the European Union ended, and whilst a trade deal was reached our new relationship with the EU hasn’t been without its challenges, as a webinar with accountants Hillier Hopkins, intellectual property advisers Cleveland Scott York and lawyers EMW explored.
The Covid pandemic has, quite rightly, taken centre stage overshadowing the day-to-day challenges businesses face when trading with our European neighbours. It is only now as we emerge from the latest restrictions that many of those challenges are coming to light.
Hillier Hopkins, Cleveland Scott York and EMW shared their thoughts on the challenges businesses face and answered questions in a one hour webinar held on 20 May.
Chaired by Terence Ritchie, Principal at EMW, the webinar panellists were:
- Ruth Corkin, Principal – Indirect Tax, Hillier Hopkins
- Andy Clemson, Senior Associate, Cleveland Scott York
- Priya Magar, Senior Associate, EMW
- Hans Schumann, Senior Associate, EMW
The consensus of panellists was that businesses, generally, have been well prepared for the new trading relationships from 1 January 2021 .
The intellectual property regime has not changed, with rights under EU regulations simply replicated into UK law. With the exception of a new immigration regime, employment law has not changed, and a last-minute trade agreement provided a degree of certainty for the next five years.
In the first few weeks of the new arrangements, many goods imported from Europe were simply waved through with declarations to be made at a later date. Goods appeared to flow with little problems.
Yet with the Office for National Statistics reporting a 23% fall in trade with the EU in the first three months of the year, it is only now that challenges surrounding international trade are coming to light.
There are, says Andy Clemson, concerns on intellectual property rights on the near horizon. Questions remain over whether UK businesses registering rights in the EU will need an EU representative, and whether UK rights holders with an EU domain will need to register them to a European entity?
Questions also remain unanswered regarding the transfer of data between the UK and the EU, with a transitional window closing in July. We hope, says Hans Schumann, to achieve an adequacy provision but it is far from guaranteed.
For employers, one of the largest and more pressing challenges on the near horizon is the deadline for EU nationals to register their settled status. The window to register closes on 30 June, says Priya Magar, at which point EEA nationals will no longer be able to use their passports as valid identification for a right to work check. Employers should send communications out to staff to remind those that need to apply to do so, and that if they don’t, they may lose their right to work in the UK.
Perhaps the most significant challenge facing businesses trading with Europe has been around customs declaration, import duties and VAT.
HMRC has, perhaps understandably, focused its resources on the Covid pandemic but that has had a knock-on effect for businesses trading internationally, says Ruth Corkin. A simple VAT registration is now taking upwards of 12 weeks.
Ruth also points to UK suppliers in the construction, retail and arts industries being restricted from installing their own products in Europe with, for example, the French government insisting that only local trades can conduct installations.
Reclaiming VAT on European trade, so-called 13th Directive Claims, is perhaps the single largest challenge. A process that was once automatic and led by HMRC, is now paper-based, with claims submitted in local languages and supported by original copies of invoices. It may be easier, Ruth explained, to register a business entity in Europe.
A recording of the webinar can be found here.