Five burning Brexit questions you were afraid to ask
Brexit is full of unknowns, none more so than if it will actually go ahead or not. There is a great deal of misinformation circulating and myths about life after the UK leaves the EU have steadily grown. In correlation with that I’ve received a growing number of calls from DBA members that generally start with the words ‘this may be a stupid question, but…’
As we all know, there’s no such thing as a stupid question – especially when there is so much uncertainty – so I thought I’d share with you my answers to the top five questions I get asked about Brexit, that you need to know but may have been afraid to ask.
1) Do I need to open a subsidiary company and associated bank account in Europe to continue working for my EU based clients?
No. There will undoubtably be some disruption, but this will mainly relate to the movement of goods and people. Money will still flow and the world wide web will still operate, allowing you to send files, receive payment and continue to operate as you usually do in the servicing of your clients.
There are obviously benefits to opening an office close to your clients if it makes commercial sense. And some clients might take a personal negative view of British companies post Brexit so an EU presence could be an advantage in some circumstances, but it will not be a necessity.
2) Will our fees be subject to tariffs when working for EU based clients?
No. Cutting ties with the EU and the Customs Union will result in tariffs on many things – but these have to be items that can be tracked, and then have an additional charge added when it enters the EU. This can be done on goods (anything that physically crosses a border) and financial services (which have highly regulated systems and processes).
Design is a service. It involves consultancy, creative insight and implementation – usually in an electronic format – all of which can be completed and delivered without creating an actual ‘thing’ that needs to go through customs control. Unless the powers that be develop a system that can track the work you supply to clients you won’t have to worry about tariffs.
There are times when some design agencies may be impacted by customs controls – from the transport of models and prototypes to the delivery of exhibition stands. In these cases the agency should check their particular circumstances with gov.uk
If you are exporting goods, the government provides this advice on what you need to do now to make sure you’re able to send goods from the UK to the EU after Brexit.
3) Will we need to apply for a licence to work for European clients?
No. In effect, working for a European client will be no different to working for one in Korea, Dubai or Bolivia. There may be some European businesses who are put off working with a UK agency due to their own political outlook and disappointment in Brexit, but these should be outnumbered by the businesses who are interested in taking advantage of the current exchange rate which makes UK design much cheaper than it was.
4) Will we only be able to recruit UK citizens?
No – but, it will get harder to recruit from a wider pool than just UK citizens. At present EU nationals living and working in the UK will have a right to remain, but post Brexit immigrants from EU countries will be treated the same as those in the rest of the world. There is a danger of agencies being put off by the red tape involved in securing visas for overseas workers. In addition, a minimum wage threshold of over £30,000 for overseas workers may be restrictive for agencies looking to develop young talent at the same time as creating a culturally diverse working environment. This is a concern for those companies looking to increase their overseas client base as a culturally diverse team is usually seen as an advantage.
Government guidance on the immigration arrangements for EU, EEA and Swiss citizens and their family members who move to the UK after Brexit if the UK leaves the EU without a deal can be found here.
5) Should we be scaling down the amount of work we are doing overseas?
No – absolutely not. With the weakness of the pound, UK design has become far more affordable for clients around the world. The proportion of fee income for DBA Members from overseas clients increased from 23% in 2018 to 27% in 2019 (and has gradually increased every year since 2016)*.
The main impact to UK design agencies of Brexit could be the impact it has on your clients. If they cancel or postpone projects, or decide that (for whatever reason) it would be better to use an agency within the EU, then there will be a reduction in the amount of work available. To mitigate this risk, we recommend that DBA Members look further afield for work. Exporting advice and signposting to contacts who can help you grow your reach internationally can be found here. And market guides can be found here.
If you are looking for the opportunities in Brexit and have not had a great deal of experience working for overseas clients, there are resources available on the DBA website including information on developing an export strategy and your options for accessing new markets.
Search DBA Resources for a range of advice on international trade.
HM Government advice for UK importers and exporters to prepare for a no-deal Brexit
The Government has a ‘Get ready for Brexit’ page where you can answer a few questions to find out how your business should prepare.
And the Department for International Trade shares this advice on preparing your business for Brexit:
You should check the latest guidance and steps to:
- Receive goods from the EU
- Export or transport goods from the UK to the EU
- Provide services to the EU, Switzerland, Norway, Iceland and Liechtenstein
Further information and key actions for UK businesses in a no-deal Brexit:
- Check the status of the trade continuity agreements the UK has with non-EU countries to help you understand how trading may change and enable you to take appropriate action.
- You must register for an Open General Export Licence (OGEL) if you export dual-use (civilian and military) items to EU countries and the Channel Islands.
Further information and key actions for UK importers of goods in a no-deal Brexit:
- You may need to pay different rates of customs duty (tariffs) on imports. These temporary rates would only be in place for up to 12 months.
- See what preferential trade arrangements are in place under the Generalised Scheme of Preferences (GSP) to reduce or remove tariffs on your imports from certain developing countries.
The Government is holding events to help your business get ready for Brexit. Sign up to:
- Brexit Business Readiness Events to help businesses prepare for Brexit.
- DIT tailored Brexit Preparedness Workshops for businesses that export.
- DIT Webinars on 8 October for exporters of goods and services.
- HMRC Webinars for businesses involved in the movement of goods between the EU and the UK.
Keep up-to-date on Brexit and get tailored guidance:
Sign up for alerts (regular Brexit updates) on subjects including the Article 50 process, trade negotiations, and announcements about changes to trading.
*As found by the DBA Annual Survey Report.
If you are looking further afield for your clients, find out how DBA members are increasing the proportion of their income from overseas clients at the launch of the 2019 DBA Annual Survey Report.
The Report is an invaluable members-only business tool which enables you to benchmark your financial performance with those of your peers.
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