Brexit proofing your manufacturing business

With Brexit now going ahead as planned on 29 March 2019, smaller businesses will need to make more rapid decisions on how to prepare for what remains a very unclear future.

The advice initially issued on 4th December 2018, in order to prepare for a no-deal Brexit, has raised some concerns over a ‘frictionless’ trade not being achievable. Not having a fixed solution in place could lead to great disruption and additional administrative burdens on trading businesses within the EU.

What happens if ‘no deal’ Brexit occurs

If a no-deal Brexit takes place, almost 145,000 business will need to apply for customs declarations. This will increase the numbers sought to almost 255 million, thus then leading to potential delays and businesses having to prepare much earlier in advance.

Recommendations for manufacturers

Three recommendations have been made for manufacturers trading within the EU.

1. Firstly, obtain an Economic Operator Registration Identification (EORI) number.
2. Secondly, decide whether customs declarations will be made in-house, using specialist software, or by engaging a third-party customs broker or freight agent.
3. Thirdly, check if additional information is likely to be required for the completion of safety and security declarations.

Preparing for Brexit

Menzies microscope iconDue to the level of uncertainty towards Brexit, many companies have not planned ahead yet. This contentment could be revealing them to bigger Brexit risks. Statistics show that around 62% of UK businesses are yet to carry out a Brexit risk assessment. However with Brexit deadline closely approaching, it is important that businesses start assessing and mitigating potential risks.

A risk mapping exercise should be carried out by businesses, as preparation for Brexit. From this, forecasts models should be prepared which can be used to assess the impact on companies, following Brexit. To assist SME manufacturers in preparing for Brexit, we have developed a Brexit Barometer, covering ten key areas of potential risk. Using this tool, businesses can develop a Brexit plan, which addresses the main risks they might face in the event of a no-deal Brexit.

HMRC are also in the process of bringing in a Customs Declaration Service as of 29 March 2019. In addition to seeking for an EORI number in advance, businesses should start considering alternative sourcing strategies. For example, partnering with other manufacturers could allow businesses to share the cost of stockholding and bonded warehousing could help delay VAT payments. It may be worthwhile investing in an overseas basis, if you are a business that trades often across the UK/EU cross-border movements.

Other risks

branded icon of notebook from menziesAnother risk for manufacturers includes having Intellectual property (IP) rights. While pan-European patent rights are unlikely to be affected by Brexit, other IP assets – such as trademarks and registered design rights, could be affected. To avoid any intangible assets being compromised, it is essential for businesses to carry out a review of their IP portfolio.

Another important thought is to understand future access to people. After Brexit, unrestricted access to low-skilled EU workers will end and, in the short-term, manufacturers may find it problematic determining the right-to-work status of some employees. Low-skilled EU workers could become a more sought-after commodity, which could lead to shortages and increase wage costs. To mitigate these risks, businesses should review their recruitment and retention strategies and source information about special visa schemes that they might be able to utilise, such as Exceptional Talent or Tech Nation Visas.

Use our Brexit risk barometer for manufacturers to see what impact Brexit could have on your business or learn how prepared your business is by using our Brexit checklist for manufacturers. 

Caroline Milton - Menzies Accountant

Caroline Milton is a Partner and manufacturing sector specialist. For more information on how to Brexit proof your manufacturing business, contact her by phone on +44 (0)1372 366173 or via email on

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