Revenue warns small firms to act urgently on Brexit business risks

Invest NI asks North’s parties to take steps to avoid consequences of no-deal scenario

The Revenue Commissioners’ letter emphasises the necessity for businesses to talk to hauliers.

The Revenue Commissioners’ letter emphasises the necessity for businesses to talk to hauliers.

 

The Revenue Commissioners will next week issue an urgent warning to 70,000 small companies, telling them that “acting now is vital” to protect themselves from a “very real and possibly significant” threat to their businesses from Brexit.

It comes at a time when the board of Invest NI has written to the North’s political parties, including the DUP, asking that “every possible step is taken to avoid the consequences of a no-deal scenario” in the ongoing Brexit negotiations.

The intervention is noteworthy because it is the first time the business development agency, which is equivalent to the IDA in the Republic, has become involved in the Brexit debate. Invest NI is part of the North’s department for the economy, whose last budget was set directly by the UK government.

Meanwhile, The Irish Times has obtained a draft of the Revenue warning to small companies, many of which trade with the UK but do not have experience with customs or tariffs.

It states: “Advance planning is vital, otherwise your business will experience potential delays on imports or exports, cash flow delays, etc.”

The letter warns: “If you have taken no practical steps to prepare for Brexit then the challenges to your business are real and possibly very significant. Acting now is vital.”

Logistical challenges

Sources said the letter was a firm indication of the seriousness of the logistical challenges facing Irish small and medium-sized enterprises (SMEs).

Companies are advised to consider the impacts of dealing with tariffs on goods. “You will have to pay import duties when you bring goods in from the UK. Have you planned this from a cash flow point of view?”

Companies will also be told to study where different elements of their supply chain originate from and travel through. They will be told to learn a complex set of rules known as the union customs code.

The Revenue Commissioners’ letter also puts an emphasis on the necessity for businesses to talk to hauliers.

“They will need new information and data to be able to move these goods for you. If you are not clear about what data is needed and when, your business will be at increased risk of significant delay in moving goods to and through the UK,” the letter says.

It continues: “If you buy or sell medicines, environmental health products, animals, plants and products of animal or plant origin out of or into the UK, you are likely to need certification from other government agencies. Without these you won’t be able to buy or sell such products from or into the UK”.

It concludes by reiterating: “You are advised to act now to ensure you are prepared to respond to any challenges to your business presented by Brexit.” It advises companies to make contact with Enterprise Ireland, Bord Bia, InterTrade Ireland or the Revenue for more advice.

Tariff classification

Carol Lynch, a partner with the customs and trade division of advisory firm BDO, said that while some steps outlined in the letter were straightforward, “other areas are going to take a lot more work”.

“For example, businesses will need to determine with 100 per cent accuracy the tariff classification of their imports and exports, as this determines the applicable duty rate. This might be okay if you have two or three products but if you have 100 or more that is going to be a complicated process,” she said.

“There is also a shortage of clearance agents, so it is going to be difficult to find and appoint one as demand increases,” she added.

Lynch also warned of practical barriers, saying: “Few hauliers will have any experience of customs regulations, as these controls were all removed with the introduction of the single market.

“Finally, there is also the cash-flow impact of paying duty and import VAT on arrival of goods from the UK if you aren’t authorised to operate a deferred payment account. All this now needs to be set up in less than eight weeks.”