As the post-Brexit EU trade deal negotiations continue into the Autumn, and we come to the end of the Transition Period on December 31, UK businesses must prepare. Department for International Trade (DIT) Export Champion and Chief Executive of Morningside Pharmaceuticals, Dr Nik Kotecha OBE, shares his thoughts on how to be ready for every known and unknown eventuality.
As the famous quote goes ‘there are known knowns, known unknowns and also unknown unknowns’.
This very much applies to the current Brexit negotiations between the UK and the EU; we know there are red lines on both sides, though the outcomes are still unknown.
What is clear to me and my company is that businesses must prepare for every eventuality, and start right now, if they have not done so already.
The first question is where should you start? The best source of information if you are just beginning the process is gov.uk/transition where you can find the latest Government guidance on preparing for the end of the transition period.
For most businesses, the guidance on importing and exporting goods with the EU is particularly important.
If you can’t find the answers you need, you can also make use of an enquiry service run by the Department for International Trade. Fill in the form and one of their experts will get back to you.
Preparing our supply chain
At Morningside Pharmaceuticals, we manufacturer and supply quality generic medicines to both UK and international markets. We are actively making plans to mitigate any disruption to our import and export activities from the EU, particularly with our supply chain.
There is no import duty on ‘finished’ pharmaceutical packs, but we are concerned about disruption to our supply chains and the time taken to get products to destinations through customs.
We’re checking tariffs that may be payable under the new UK Global Tariff that will apply to goods imported from around the world, unless there’s a trade agreement in place.
One of the most important actions we took was to apply to be an Authorised Economic Operator (AEO), which is an international standard accreditation given by HMRC, which shows that our supply chain is safe and secure. It also ensures that the holder may be able to benefit from arrangements under Mutual Recognition Agreements (MRA), which are agreed with third country customs authorities.
To achieve this a business must submit an application to HMRC, which is then followed by an audit and inspection of the supply chain. To help prepare for the audit we carried out a gap analysis to further improve our processes, which were fully reviewed in line with the criteria. We believe that the AEO (C) & (S) Standards will keep us in good stead for not just trading with the EU, but for the rest of the world, as well.
Another important step is to check if you should register for VAT. You must also ensure you apply for a license or certificate if you need one for the sector you work in, and make an export declaration to get goods through customs.
For importing, businesses will have to make customs declarations when importing goods from the EU. Be aware that from January 1, 2021, the rules for importing some types of goods will change. You should also make sure you have an EORI number starting with “GB”, have checked the rate of tax and duty needed to pay, and have looked at ways to make the importing process quicker.
As a responsible manufacturer and supplier of pharmaceutical products we have proactively taken action to ensure there is no disruption to the supply of medicines. An example of this includes a buffer stock of six weeks’ worth of drugs to cover any potential delays with shipping goods at the ports.
In terms of our logistics partners, most haulage providers are also taking part in Alternative Routing, which is worth exploring and may help avoid delays at Dover and Calais.
Preparing to keep exporting
All export shipments to the EU will require a customs declaration, and we’ve ensured we have an EU EORI number staring with “GB”, and if there are any licensing requirements or rules for the goods we export. For example, 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, must be released by a Qualified Person (QP) within the EU.
In the event of a No Deal, we have built contingency plans to release batches for our customers in the EU through a site in the Republic of Ireland. Having an EU base will also enable us to comply with EU regulations around pharmacovigilance and the licensing of medicines in the EU from an EU territory.
Another high priority for us as is to work with the Department for Health & Social Care (DHSC) to ensure we are able to continue to supply our patients in the UK, as well as exporting medicines to patients who need them ‘on time’, especially as the risks of a second Covid-19 wave this winter are all too apparent.
My advice to businesses would be to look at all of your known knowns and unknown knowns, and start preparing for every eventuality. This is the only way to ensure businesses are as prepared as they can be. Get started now, use gov.uk/transition to learn more about the action you need to take to keep trading in 2021.