23 Oct 2020
New rules for companies are set to come into force at the end of 2020, which is when the Brexit transition period ends. The Government is warning that the clock is ticking when it comes to getting ready for a no-deal scenario and business leaders are being told not to “get caught out”. Here's what businesses can do to prepare.
Following a breakdown in talks between Britain and the EU over the specifics of the deal, the Government has launched its ‘Time is Running Out’ publicity campaign. HMRC is contacting 200,000 companies with details of the new customs and tax rules.
“It is on all of us to put in the work now so that we can embrace the new opportunities available to an independent trading nation with control of its own borders, territorial waters and laws.” - Michael Gove
Boris Johnson and Michael Gove have said they would discuss preparations with UK businesses. Earlier in October, Gove told Sky News that there was less than 50 per cent chance of the UK making a post-Brexit trade deal with the EU, while Johnson explained that the UK must prepare to exit the EU on Australia-style terms.
The Government’s ‘Border Operating Model’ is a 138-page guide to how the border with the European Union will work after the transition period. It also provides companies with information on what they can do to prepare for the rules.
Although the transition period will end on 1 January 2021, the UK Government has taken the decision to introduce the new border controls in three stages up until 1 July 2021.
In the guide, the Government tells businesses:
- You must prepare for new customs procedures if you sell goods to the EU.
- When you travel to the EU for work, you’ll need to check to see if you need a visa or work permit for the country you’re visiting.
- You’ll have to prepare your business for the implementation of the new immigration system if you employ overseas nationals.
- From 1 January 2021, you must be a Home Office licensed sponsor if you want to hire anyone from outside the UK.
- If your business/organisation receives personal data from contacts in the EEA, you may need to take extra steps to ensure that the data can carry on flowing legally at the end of the transition period.
- You'll need to make sure that your qualifications are now recognised by EU regulations to be able to practice or service clients in the EU (if you provide services in the EU).
“Businesses must act now to ensure they are ready for the UK’s new start as an independent trading nation once more. There will be no extension to the transition period, so there is no time to waste.” Business Secretary Alok Sharma
The Government started to refer to an ‘Australian-style deal’ at the beginning of 2020 when the prospect of a no-deal scenario became more likely.
The EU doesn’t have a trade-agreement with Australia – it currently operates primarily on the rules of the World Trade Organisation (WTO). Australia has been in talks with the EU since 2018 to implement a free-trade deal and they are yet to reach an agreement.
If an Australian-style deal does end up happening, there will be tariffs on imports and exports to the EU as well as customs checks on goods.
Working capital – the capital a business has to spend at any given time – indicates to what extent a business can pay off its debts. It’s also an indicator of how effectively a company’s inventory, accounts receivable, accounts payable, and cash are handled.
Technically speaking, working capital is defined as current assets minus its current liabilities. Typically, working capital is calculated based on cash, assets that can quickly be converted to cash (such as invoices from debtors), and expenses that will be due within a year.
As well as showing that your business can meet its financial obligations, having positive working capital provides you with a degree of financial flexibility and ‘cushioning’ at times when costs – as well as levels of uncertainty – are higher. Business owners also use working capital to invest in and expand into new product or service areas.
Working capital finance is designed to provide businesses with a working capital boost. It’s a broad term and that can refer to many different forms of finance. Some working capital loan types are used more broadly, whereas others serve a specific purpose or industry.
Secured or unsecured short or medium-term loans designed to boost cash.
A form of unsecured lending that often comes with low credit limits.
A pre-approved source of funding that you can use when you need.
Finance based on money owed to your business; it provides you with a percentage of the value owed.
A method of using assets in your business to raise finance.
A cash advance for merchants that accept payments from customers using card terminals.
Funding available specifically designed for paying VAT or corporation tax, allowing you to spread the costs over 3-12 months.
You can use the Funding Options platform to see what type of working capital finance your business might be eligible for as the Brexit transition period comes to an end.
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