Brexit – The Challenges for Construction

Steve Taklalsingh is MD UK Business at Amaiz. With just a few short weeks until the UK leaves the European Union, Steve takes a look at the opportunities and challenges the construction sector might face. 

In the midst of the global crisis caused by the pandemic it was easy to forget that Brexit also looms large. But now we’ve reached the deadline. As I write, an agreement is promised ‘any minute’, but until it’s actually announced I won’t get too excited. My company, Amaiz, provides a business app that’s proved popular with the construction sector. It makes it possible to manage a current account with pre-paid business card and with added bookkeeping tools (including invoicing) on the go, all from your smartphone.

We wanted to find out how ready the SMEs that use our app are for Brexit, and what key issues they are going to face. At the end of last month, we carried out research and found that:

• Nearly half (49.2%) of company leaders have already reviewed new regulations set to take force on 1 January 2021 and made changes to ensure their companies will meet them
• Only 17% of companies say they have failed to prepare

Where do you fit into this?  Below is a summary of some of the main changes that might be relevant to you and where you can go for further help.

Importing supplies from the EU:  

We will switch to rules faced by non-EU countries when importing from the EU. This means that you’ll need an EORI number (European Union registration and identification number) and will be required to submit a full declaration at the time the goods enter the country, unless they go into temporary storage. Completing a customs declaration is complicated and most are submitted electronically through the CHIEF system (you need to be registered to use it). While you can make declarations yourself, I would recommend using a specialist. It will be worth the cost.

Customs duty: The UK Global Tariff (UKGT) will (at time of writing) replace the Current EU Common External Tariff. This will apply to all imported goods unless an exception applies. You’ll need to find out the rates of duty. This can be done relatively easily through the government’s UK Global Tariff tool. However, you will need a commodity code and a product description.

VAT:  You will be required to pay VAT on imports from the EU. An existing low-value consignment relief that exempted some imports from VAT has been scrapped, and those worth less than £135 will no longer attract import VAT, which will be applied at the point of sale.

Buying or selling supplies – Standards and Certification

Brexit will have an impact in a range of areas related to product safety or eco-compliance, including packaging and labelling.  Goods sold in the UK, that require a CE mark, will need to be replaced with the UKCA mark. There is some leeway for existing stock.

Storing customers’ data

After the transition, the UK will no longer be regulated by the European GDPR but has passed its own version, the UK-GDPR to accommodate some differences (related to matters of national security, intelligence and immigration). Britain’s Information Commissioner is established as the data protection authority in the UK.  In the absence of a decision, GDPR transfer rules will apply to data coming into the UK from the European Economic Area (EEA).

Employing people

If you employ EU citizens, they will need a visa, which requires them to show they have a job offer from an approved employer sponsor. So, if you’re recruiting from the EU who need to become an approved sponsor. Existing EU, EEA or Swiss citizens working in the UK as of the end of the transition period will need to apply to the EU Settlement Scheme by 30 June 2021.

Brexit will affect the recognition of professional qualifications, which may have implications for UK staff who have to work cross-border in EU member states.

Insurance

A number of insurance requirements will change. This will particularly impact on companies whose employees have to travel in Europe for business purposes. For example, drivers may be required to carry an EU “Green Card” to take to the road and in some countries may also need an international driving permit (IDP).  The European Health Insurance Card (EHIC) will no longer cover UK citizens for healthcare in the EU and EEA and they will need to take out travel insurance to cover them for medical care abroad.

However, a business policy held with an EU insurer should not be affected.

Where to get help

The government launched a campaign to prepare the UK for the end of the transition and has provided information about what the changes means for business.  You can find extensive information and advice on websites such as the Brexit transition website.  Other forms of government support for small businesses overlap with efforts to help them during the coronavirus pandemic, and details can be found at the British Chambers of Commerce.

Several organisations also provide information, such as:

• the Federation of Small Businesses
• the Enterprise Nation Brexit Advice Service
• the CBI’s UK transition hub
• the ICAEW

The Opportunities?

There are bound to be challenges along the road. You might, for example, discover that you have suppliers who are affected more than you anticipated. Over time, these issues should be resolved.  However, I think the one thing that we can all look forward to is a more certain future. Since the referendum it has been difficult for any business to make plans as no one knew what the rules would be.  By January, good or bad, at least we will know where we stand.

Are there any opportunities or is it all negative?  At its worse, the EU did represent an additional layer of bureaucracy that was sometimes remote from the needs of the UK industry. Brexit could, in theory, speed up approvals and make decision making more pertinent to the local economy. For example, the government reported that this had a positive impact on our ability to get a COVID-19 vaccine first (as the UK didn’t have to wait for European Medicine Agency approval).  So, while you may find some avenues closed to you, there may well be the opportunity to influence what happens in the sector in a way that would have been, in practical terms, impossible when within the EU. Time to visit your MP!

Brexit and the pandemic have caused chaos but, as a famous writer put it, ‘chaos is a ladder’. Whilst most SMEs see many negatives to Brexit, I believe that the entrepreneurial spirit of the UK construction industry will also find ways to make it work. To succeed we must think positively.

You can download our report,  The Brexit Brink – Are British SMEs about to fall off the edge of Europe – or building new bridges? for free from www.amaiz.com.

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