Keep Calm and Carry On Selling

Despite the understandable concern on Irish shores about the UK’s decision to leave the EU, our nearest neighbour will remain a natural first market for Irish exporters. Enterprise Ireland’s manager for the UK and Northern Europe, Marina Donohoe outlines the opportunities.

 

Enterprise Ireland manager for UK and Northern Euurope, Marina DonohoeThe UK economy will still be the fifth largest in the world by nominal GDP, with a population of around 65 million— some 14 times the size of Ireland’s. It will still be our closest trading partner by geography— sharing a language and a similar business culture— and it will still have that openness to goods and services from Ireland borne of our strong cultural relationship.

While strategies to offset whatever consequences arise from the UK vote are advisable, businesses in Ireland would be missing a trick if they discounted the UK market.

In fact, Enterprise Ireland has identified seven key opportunities for Irish companies based on UK government initiatives and evidence of sectoral growth:

 

  1. The National Infrastructure Delivery Plan
  2. The Northern Powerhouse Agenda
  3. Scottish Government Investment Plan
  4. National Health Service’s ‘Five Year Forward View’
  5. Water market
  6. Financial services/Fintech
  7. Aerospace

 

National Infrastructure Delivery Plan (NIDP)

The NIDP envisages £503 billion of investment in 339 infrastructure projects across all sectors in the UK to 2021 and beyond. Irish companies are operating in these sectors already and there are huge opportunities such as:

 

Northern Powerhouse

The Northern Powerhouse is an initiative to address a constellation of issues surrounding economic growth and productivity in the North of England.

The UK government intends to spend £134 billion, 32% of which will be spent in Northern England. The goal is to rebalance the country’s economy and establish the North as a global powerhouse.

Cities include Liverpool, Leeds, Sheffield, Newcastle and Hull, as well as regions such as Cumbria, Lancashire, Cheshire, North Yorkshire and the Tees Valley.

The opportunity for Ireland lies in supporting initiatives in road, rail, freight, aerospace and skills development. Key deliverables include improving freight capacity, and road and rail infrastructure. For example, the HS2 high speed train network alone will cost £55.7 billion.

 

Scottish Government Investment Plan

Enterprise Ireland continues to have a strong geographical focus within the Scottish market. Holyrood has highlighted the strategic, large-scale investments it intends to take forward across a number of key sectors over the next 10 to 20 years. Key areas of investment which will provide opportunity for Enterprise Ireland clients include energy, water and housing.

 

National Health Service (NHS)

Despite the political and economic uncertainty the healthcare sector has remained strong over the last 12 months. An ageing population, improved diagnosis and an ever-changing world of assistive and diagnostic technologies have all ensured the sector’s appeal to client companies.

The NHS is rife with opportunities as the funding gap is set to widen to £30 billion by 2021. The NHS needs to deliver £22 billion in efficiency savings to try and offset this figure, with a lot of this being driven by a focus on digitising as much of the landscape. Our Digital Health and Health IT webinar provides expert insights into procurement pathways and winning business with the NHS, watch it here. Although the private healthcare market is also growing (currently around £4.5 billion) it pales in comparison to the £107 billion NHS budget.

 

Water market opportunity

UK water utilities are planning a total expenditure of £41 billion between 2015 and 2020. Enterprise Ireland is working with UK and global buyers who have access to this opportunity and could also prove to be a stepping stone to international projects. Our podcast on the impact of Covid-19 on the water sector and the emerging opportunities for supply chain companies is available here.

 

Financial services/Fintech

With over 250 foreign banks; expertise across retail banking; insurance; capital markets; bonds; equities; currency; payments; regulation; and sector-specific advisory, legal and professional services, the breadth of the UK financial services sector is huge. The sector employs 2.2 million people in the UK. It is a truly global centre of expertise and one that will continue to offer opportunity for Irish fintech companies after the UK exits the EU.

Opportunities will emerge as the negotiations get under way, particularly for legal, advisory, professional services and IT solutions providers, as UK firms may seek new structures around regulation, compliance, currency handling, money laundering and data handling.

This is a sector Enterprise Ireland has been working in for many years and, as new opportunities unfold, we are well placed with high level contacts to introduce our clients to key decision makers.

 

Aerospace

UK Aerospace industry captures 17% of the global market and is considered the largest player in Europe and second globally after the US. Aerospace is vastly outperforming the wider UK economy with productivity up 30% over the past five years, compared with the national average of 2%. Though heavily impacted as a result of Covid-19, the Aerospace Growth Partnership (AGP), industry and government are working together to ensure the UK is well placed for future growth opportunities. Investment in skills, technology and the competitiveness of the UK supply base is supporting this.

 

Internet of Things (IoT)

Enterprise Ireland is reacting to opportunities emerging outside of these seven key sectors too. In particular, we are responding to the growth of IoT technologies. The UK has some of the best equipment (mobiles, tablets, computers) usage rate projections in the world. The main growth areas are artificial intelligence, big data, smart cities, connected homes, transportation, health, manufacturing and smart grid for electricity.

IoT is clearly a massive growth market and as a result a source of business opportunities for Irish companies.

 

For latest news on UK opportunities visit Evolve UK.

New UK Global Tariff

The UK has announced its new tariff system which will apply at the end of the transition period to all countries, including Ireland, with which it has no free trade agreement.

Known as the UK Global Tariff, it will be applicable from Jan 1st 2021. If a trade deal between the UK and EU is reached before this date the aim would be to avoid the imposition of all or most of the tariffs.

To see the import duty that applies to goods imported into the UK, enter your commodity code into the Tariffs Tracker tool on the UK government website.

Get tailored advice from a consultant with the Post-Brexit Advisory Support

Customs: Eight steps to get Brexit ready

With the clock steadily ticking down to January 2021 and Brexit, it’s time for businesses to prepare for a very different trading environment with the UK.

Unless an extension is sought thanks to the Covid-19 crisis, businesses that trade with the UK must be prepared to meet and pay customs requirements by then. These requirements can be time-consuming and complicated, so it’s important for businesses to allow enough time to prepare as needed.

 

Transition period

“The UK has left the European Union, and we’re now in transition until January 1st 2021,” explains Carol Lynch, Partner at BDO Customs & International Trade Services in Ireland. “It’s important that businesses use this time wisely in order to prepare for trading with the UK in 2021. Ultimately, trading with the UK will be like trading with any other non-EU country, so if you haven’t traded outside the EU before, it’s essential that you know what to expect and make any preparations necessary to deal with the changes.”

 

Learning the customs rules and regulations

Essentially customs is another tax, complete with forms and payments, but with the UK being a part of the EU for so long, it’s something that many businesses and individuals won’t be familiar with. “The first step for everybody is to start learning about customs rules and regulations,” advises Carol. “There is a lot to learn, for instance the tariff classification codes and how to fill out an Import or Export Declaration Form, but there is help available. There are many courses currently operating; for instance, Local Enterprise Offices are offering one-day courses and workshops on customs and trading rules, and Enterprise Ireland is offering the online Customs Insight courses. Find out what’s in your area and avail of it.

“In my view, you need about six months to prepare. There are a number of authorisations that some companies might need and some might not, but to avoid putting pressure on yourself, you really need to start preparing six months in advance. Some steps are very quick, but some take a little time, such as setting up your payment option, so it’s important to allow for this.”

 

Next steps for your business

Like any other tax return, businesses are responsible for correctly filling out Import and Export Declaration Forms, and paying the correct amount. To ensure you’re prepared, Carol has outlined eight steps for businesses to follow in order to be ready for the January 2021 deadline.

 

1. Ensure you have a Customs Registration Number – EORI

You simply cannot import or export to the UK without being registered with customs. This can be done online with Revenue at any time and can be completed in literally 10 minutes.

 

2. Decide how you are going to pay your customs duties

One option is to pay customs through a cash account. Alternatively, another option is to pay through a Deferred Payment Account. This allows you to import goods into Ireland from the UK and pay customs duties and import tax on those goods by direct debit the following month. This requires applying first to Revenue for a Customs Deferred Payment Authorisation, and then to your bank for a comprehensive guarantee to cover the duties. You need to allow for time to get together the information for Revenue and to apply to the bank for the guarantee; I would recommend giving this process at least three months, so see September as the absolute deadline to get this process underway.

 

3. Classify your Goods

You must know the classifications for your goods when filling out your Import or Export Declaration. This is quite a complicated process and takes some time depending on your range and complexity of products – but again, you cannot import or export without giving your goods a classification number. Some think a clearance agent will do this for them, but they won’t – you are responsible for ensuring you have the correct classification codes for your goods.

 

4. Decide who will lodge Customs Declarations

You have two options when deciding who will lodge your customs declarations – employ a Clearance Agent to act on your behalf when liaising with customs, or train someone in your own company to fill out and lodge the forms. There is a shortage of Clearance Agents both here and in the UK; this is something we’re trying to address in BDO by offering training and advice for businesses.

 

5. Determine who is responsible for customs paperwork/ charges

Make a list of who you buy from in the UK, who do you sell to. Do you deliver goods to your customers’ door or do you expect them to import their goods themselves? Similarly, are your UK suppliers delivering to your door or do you have to import them into Ireland? Who is responsible for paying the charges? This responsibility must be clearly mapped out using either in-house personnel or with a broker.

 

6. Check additional requirements if you are handling agricultural goods

Additional veterinary checks and certificates may be required along with prior notifications with customs. You must be registered with the Department of Agriculture, Food and the Marine and familiarise yourself with what is needed ahead of the deadline – and ensure you give yourself enough time to complete any necessary checks or forms.

 

7. Review your VAT position

With the UK out of the EU, the VAT rules have changed for trading between the UK and Ireland, and this could impact your cashflow. Review these and ensure you’re prepared.

 

8. Check the Rules of Origin

Depending on the form of free trade agreement agreed with the UK, certain goods may qualify for lower or zero tariffs depending on where the product originated. Again, this is where checking the rules of origin and getting the correct classification for your goods is essential in order to establish if your goods qualify under any free trade agreement.

 

For more comprehensive Customs information for Irish exporters visit our Customs & Logistics pages.