Brexit – are you ready?
As the UK heads towards Brexit, Tim Jackson urges directors and officers of all UK businesses to act now to ensure they do not fall foul of changing rules and regulations.
Brexit has dominated politics, the media and many a dinner party conversation over the last 18 months. It has been almost impossible to avoid. And no matter what happens in the run up to the 29th March, Brexit won’t go away – not for a long time. As a director of a business there is another twist – if you have not considered or taken reasonable steps to plan for the potential impacts on your business, you may well find yourself being held personally responsible.
To be fair, most UK-based companies with offices in Europe have already put in place contingency plans – as there is an obvious link. However, many people we talk to at UK domiciled businesses have said that with nothing set in stone, everything, or nothing, may change. So with such uncertainty why should you, or how can you, plan ahead? Why waste time and energy preparing for what might not happen?
Recognising the risks
The reality, however, is that no matter what your business, there are risks associated with Brexit that all directors need to have considered. Aside from the highly-publicised need for many companies – from the NHS to luxury goods retailers to car manufacturers – to stockpile at least a month’s worth of supplies to counter potential customs delays at the ports, there are a host of more invisible rules, regulations and standards that companies need to comply with and more importantly going forwards, keep up to date with.
Brexit, in whatever guise it takes, will mean the UK and Europe will not be in step going forward over employment law, trading standards and regulations, and keeping up with changes will be a real challenge. Failure to keep pace with regulatory change for example could quite easily result in a UK firm undertaking a contract in Germany, finding themselves in breach of new EU trade rules and being pursued by a potentially unsympathetic regulator. And it is the directors of the company who will have to appear in court and face the consequences.
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Have a plan in place
The key to avoiding unnecessary breaches is having a plan. Most companies should, at a bare minimum, establish a Brexit committee, or at least apportion Brexit-watch responsibilities to a senior member of the team. This team will need to consider the potential impact on the business of both a hard and soft Brexit. This includes HR and employment impacts (such as EEA nationals working in a UK operation or vice versa); the impact on budgets and income of increased costs; and regulatory implications (for example, whilst roughly two thirds of the UK’s health and safety laws originate from EU legislation this will change). Finally, there is governance – in particular, the responsibilities and liabilities of directors.
Getting the governance right is essential. Companies should be clear about who has ownership and accountability for the decisions and planning, avoiding the potential for chaos and costly mitigating actions that would otherwise have been unnecessary.
Insurance of course has a role to play. To use a phrase prevalent in the ongoing Brexit negotiations there is a backstop available for directors and officers concerned about their ongoing liabilities. Whilst D&O insurance will not cover any fines and penalties issued for breaking EU rules, it will cover the often significant investigation costs and expenses. For example, insurers will provide immediate access to expert legal guidance which can help and perhaps stop situations becoming more serious.
What you should consider
Leaving the EU creates regulatory, operational and financial implications for businesses of all sizes and across all industries and just because the future is uncertain, there is no excuse for not planning.
So here are some thoughts to help you prepare:
Understand how the different outcomes of Brexit (including a ‘no deal’) will impact your business.
Consider putting a contingency plan in place to minimise negative factors.
Get the right advice on employment, especially for employees who are EU nationals.
How will your operations be impacted? From sales administration through to logistics.
Have you assessed the tax implications? Customs, tariffs etc.
What about your profit? Conversion rates, transport, additional administration.
Do you trade with clients and suppliers who are in the EU? How will Brexit impact this?
An area of high risk is legal and regulatory matters – how would you face the consequences of unknowingly breaching the law?
Finally, assess both the risks and opportunities that Brexit presents.
What is Miller doing to address Brexit?
With the outlook uncertain, Miller has an adaptable solution in place (which includes the formation of a Belgian company) to ensure that we can continue to offer our clients the same market-leading offering and high standard of service, regardless of the Brexit outcome.
We continue to monitor the situation closely and should you have any questions or concerns about Miller’s Brexit position and wish to discuss further, please email brexit@miller-insurance.com or visit our Brexit page.
