Business to business 'No Deal' Brexit advice
An opinion piece on Brexit by Dr Nik Kotecha OBE, chief executive of Morningside Pharmaceuticals Ltd; Department for International Trade (DIT) exporter and a CBI regional councillor.
Preparing to leave the European Union must currently be the number one priority for every UK business.
It is one of the most challenging issues facing UK companies and there is still so much uncertainty of what the actual terms of the UK’s departure from the EU, if there are any, will be.
My company, Morningside Pharmaceuticals, manufactures and supplies quality medicines to the UK and international markets. Here are some details of the action we have taken to ensure the business is ready for every eventuality.
Stockpiling and Warehousing
Due to the need for continuity of supply of medicines we have taken advice from the Department of Health and Social Care (DHSC) and stockpiled a minimum of 6 weeks’ worth of drugs, to cover any delays caused by a No Deal Brexit. This is to cover any delays with shipping goods at the ports.
We have almost doubled our stock levels since December 2018, which has meant that we have had to find extra storage space that provides temperature and humidity control. A large number of manufacturers and suppliers are doing the same, which has meant the costs of storage have also become higher.
In the case of a No Deal Brexit, it is anticipated that there will be delays at the border, as the free movement of goods from the EU will end. This means everything that we are importing and exporting from the EU will become subject to customs checks and procedures.
The Government has stepped up efforts to ensure businesses are ready to trade post-Brexit by automatically allocating more than 88,000 VAT registered companies across the UK with Economic Operator Registration and Identification (EORI) numbers. All EORI numbers must start with GB.
You can also use the Common Transit Convention (CTC) to move your goods quicker so customs declarations are not required at each border crossing.
As an interim measure, the government is also rolling out Transitional Simplified Procedures (TSP), which make it easier to import goods from the EU in a No-Deal situation by delaying your declaration and paying any relevant import duties and/or VAT. This is something we have signed up to as part of our contingency planning.
Look into setting up a Duty Deferment Account too, which will enable you to make one payment of customs duties a month instead of paying for individual shipments. You must set one up if you plan to use Transitional Simplified Procedures.
You will also need to check the rate of tax and duty to pay, as you will need to pay customs duties and VAT on all imports.
For all EU shipments a customs declaration will be required.
The rule for pharmaceuticals entering the EU is that any product that is being used in the EU and going to an end patient there, has to be released by a Qualified Person (QP) within the EU. In the event of a No Deal Brexit, we have made contingency plans to release batches for our customers in the EU.
Having an office in the EU will also be vital for preparing for regulatory changes brought about by a No Deal Brexit. One particular area is pharmacovigilance, which is the practice of monitoring the effects and safety of medicines. Having an EU base will enable us to comply with EU regulations around pharmacovigilance. It also means that licensing of medicines in the EU must be held in an EU territory.
Other export advice from the government includes; making sure your business has an EU EORI number that starts with GB, check your importer has an EU EORI number, check the rate of tax and duty for your goods and check what you need to do for the type of goods you export.
Supply chain holdups, particularly at the Port of Dover where the majority of our goods come across from the EU, is a concern for many businesses.
To help alleviate delays at Dover, the government plans to bring in new measures that will improve Kent’s resilience if services across the English Channel are disrupted. This is called Operation Brock.
To ensure delays are kept to a minimum the Government is running a number of schemes to secure ferry space. They plan to buy space with the ferry organisations, which will give businesses like ours the opportunity to register for space and use it for priority orders.
The government is also introducing an Express Freight Service, which will be rolled out if there are any shortages of essential goods, such as medicines. This will see a courier service contracted out to guarantee priority orders have minimal delays.
A facility in the port of Ostend, in Belgian, has been set up too, so if there is a problem manufacturers can apply for a coupon to move stocks through there efficiently in the event of a No Deal Brexit. Our haulage providers are also taking part in Alternative Routing. This will see other routes looked at to avoid delays at Dover and Calais.
We are applying to be an Authorised Economic Operator (AEO), which is an accreditation given by HMRC, which shows that our supply chain is safe and secure. To achieve this a business must submit an application to HMRC, which is then followed by an audit of their supply chain. To help prepare for the audit we carried out a gap analysis to further improve our processes. During this audit our procedures were reviewed in line with the criteria, which identified any gaps.
Companies can also apply for a Training Grant, which is for any company that has to do additional work with regards to customs procedures because of Brexit. This grant will be paid by the Government to the company applying, which will then be able to fund the training from their supplying partner.