Deal or no deal: What happens after a 'no deal Brexit'?

  1. Francois Badenhorst

    Francois Badenhorst Business Editor, UKBF & AWEB Staff Member

    91 18
    8 |

    The American poet Robert Lowell once said that the light at the end of the tunnel is just the light of an oncoming train. It’s hard not to think of Lowell’s cynicism as the Brexit deadline approaches and the political theatre intensifies.

    For everyday businesses, entities that have quotidian concerns like cash flow, profit and loss, Brexit isn’t just a political parlour game. It’s a real, existential concern. And it has proved difficult to find any sort of steady guidance on what to expect in a post-EU United Kingdom.

    “The changes brought about by Brexit are likely to be the most profound we have seen in a generation,” the ICAEW wrote in its recently published Brexit guide for businesses. “While on 12 July 2018 the UK Government published a white paper with its preferred approach proposing an economic and security partnership with the EU and a frictionless border for goods, it remains to be seen whether such an aspiration is achievable.”

    Emphasis on “achievable” because any agreement means taming all sorts of political agitation at home and gaining the acquiescence of the remaining 27 EU member states. Certainty is hard to come by.

    You’ve likely heard the phrase “no deal Brexit” being uttered at some point. Depending on your outlook, this is either a glorious recapture of Britain’s nationhood or a disastrous crash landing. Either way, a no deal Brexit means a few things in particular.

    “Brexit could necessitate new trade arrangements for businesses across the UK and Ireland, as well as creating new requirements to pay customs duties,” advised the ICAEW. “Businesses will need to look at their supply chains and establish exactly how Brexit will affect them and what actions they need to take to prepare.”

    The important transition here is from the Customs Union to the EU customs regime. The Customs Regime is the hardball version of the EU’s trade rules (at least when compared to the frictionless Customs Union).

    The regime applies to countries outside the EU Customs Union, called ‘third countries’ in EU bureaucratic argot. If the UK leaves the EU Customs Union, then it will be a third country. Duty is paid when the goods from third countries first enter the EU and there will be customs checks between the EU and the UK.

    “In some respects, we already know what the situation will be like because there are already third countries that we import goods and services from,” said Nick Hunt, a VAT consultant for Omnis Vat and former VAT officer for HMRC.

    “From a compliance point of view, if we end up with ‘no deal’, it will create major headaches for businesses that are using the EU as a means to bring items in without duties.” And that’s not just completed products, as Hunt pointed out, many businesses import components for use in manufacturing.

    “Businesses will need to think about how it will impact logistics. They might be sourcing goods from the UK and the EU. Perhaps they will have to change this.” At present, you’re expected to pay VAT and duty to import goods from a third country.

    It’s possible to delay this payment of VAT and duty - but that involves your bank guaranteeing you’re good for it, explained Hunt. “Smaller businesses might not be able to do that. They can’t receive the backing from the banks.”

    Hunt was careful to not veer into anti-Brexit hysteria, however. “It’s not to say that the government can’t strike new agreements elsewhere. But at the moment, there’s nothing in the pipeline. At least not publicly. Looking beyond the horizon. There’s nothing to be seen. That’s why there’s all this uncertainty.”

    Do you have an alternative opinion on Brexit? Reckon the UK's exit is going to be good for small businesses and want to write an article about it? Get in touch with Kat - we'd love to post an opposing opinion.

  2. The Byre

    The Byre UKBF Ace Free Member

    8,735 3,410
    There won't be any Brexit (other than perhaps a very soft 'Norway' option). A 'no-deal' Brexit would have to mean boarder controls and even a five minute carnet check (like they ever managed to do a carnet in just five minutes!) would bring most ports to a grinding standstill and turn Kent into a lorry park.

    A 'no-deal' Brexit could turn the UK into Zimbabwe. That is not going to happen - its the Millennium Bug all over again. Much ado about nothing.

    Every time one looks at the various options, one is forced to realise that a no-deal Brexit just is not one of them.
    Posted: Aug 2, 2018 By: The Byre Member since: Aug 13, 2013
  3. espace

    espace UKBF Newcomer Free Member

    0 0
    I don't see how Brexit can be good for business, and anyone doing business abroad should have an emergency plan on the table by now. We have been on the continent for decades, and we are in position to help...
    Posted: Aug 3, 2018 By: espace Member since: May 12, 2013
  4. Import Expert

    Import Expert UKBF Regular Free Member

    291 126
    I have a feeling common sense will prevail and a last minute deal will be agreed, or there will be a lengthy transition agreement put in place while we try and come up with a mutually satisfactory solution. There is much more than just international trade involved here and no infrastructure/staffing in place to handle a 'cliff edge'. Worst case scenario I still feel that if customs entries are re-introduced for EU trade, a Free Trade Agreement will be agreed with the EU. It's in their best interests as much as ours.

    The EU are not going to make it easy though, why would they? If we get a free ride then other EU countries might follow.
    Posted: Aug 7, 2018 By: Import Expert Member since: Feb 1, 2012
  5. iDigLocal

    iDigLocal UKBF Regular Full Member

    111 19
    I think this is what it is going to be like if there is a no deal.

    The yellow creature represents the political establishment. You can imagine any one individual inside the suite or a particular group of people, a political party for example.

    Last edited: Aug 8, 2018
    Posted: Aug 8, 2018 By: iDigLocal Member since: May 9, 2018
  6. Steven001

    Steven001 UKBF Regular Full Member

    162 9
    World Trade Organization rules, the freedom to deal with any country we want with no hidden fees, not paying billions a year into the coffers of the EU, economic and social freedom ahoy!

    Glad I voted to leave the EU, the only time I was actually proud of a political decision I made in my entire life.

    All we need is a fair but nationalistic government in power to pull this off. The current stock of mainstream parties (Lib/Lab/Con) are not acting in the interests of our nation, they seem bound to foreign powers and mega corporations who suck the wealth out of the country. We need to get rid of them and elect a party that puts our nation first.

    We can be highly successful if we actually try. I'm looking forward to the future, no more project fear.
    Posted: Aug 12, 2018 By: Steven001 Member since: Aug 1, 2018
  7. John Doe-Smith

    John Doe-Smith UKBF Newcomer Free Member

    13 1
    If I may...
    I think you are mixing things here (political reasons and economical reasons are not always in the same page and many times contradict each other, as Brexit... which is like my cat, very nice, very friendly in appearance, but very in deep is full of s***)(I use to be pro-brexit by the way, and then I joined university and started to do research... now I'm pretty much scared of what's going to happen)

    WTO rules demand that a country is able to control its borders/frontiers.
    Ireland will not agree with a border between them and N. Ireland, thereby no real control over borders/frontiers, thereby no possibility to adhere to WTO rules. So forget WTO rules, that is a dead end.
    Posted: Aug 14, 2018 By: John Doe-Smith Member since: Aug 14, 2018
  8. Steven001

    Steven001 UKBF Regular Full Member

    162 9
    No offense but I'm sure you are: it's well known that universities and colleges are breeding grounds for extreme left wing ideology. All you have to do is look at teachers, professors and student bodies in the UK, almost all of them hate Brexit and love the EU, it's like a mad cult!

    The fact is we haven't even left the EU yet and so speculation about what could happen will remain just that, speculation, with I might add no evidence whatsoever to back up any of the project fear claims including the Irish border situation.

    Like it or not the people have decided to leave the EU, any talk of a deal (in reality) is a ruse to keep us tied to the EU, something I and at least 17.4 million other people are against. We have a tremendous opportunity for a bright and prosperous future as an independent nation, we must take this opportunity and make the best of it.
    Posted: Aug 19, 2018 By: Steven001 Member since: Aug 1, 2018