The U.K. legislature, Parliament, has said resoundingly what it doesn’t want, but given few clues on what it does want. What can be deduced is that Parliament seems overwhelmingly against a “no-deal” Brexit.

It now looks likely that Article 50 will be revoked (temporarily at least) to allow more time for negotiations, and it must then be a possibility that over time the government will move to a position where it feels able to remain within the EU, with concessions to address key U.K. concerns.

But this is all speculation for now. What remains certain is that uncertainty will continue, and as a result U.K. businesses should continue to plan for worst case scenarios. Whatever happens, as ever, businesses that are best prepared and able to move quickest will benefit the most, or suffer the least.

Worst case scenario for U.K. businesses trading with the EU is no-deal, and this is what they should prepare for.

Businesses which will be most affected are those which currently deal exclusively with the EU, often referred to as intra-EU trade.

While businesses which currently trade with both the EU and the rest of the world will be more familiar with the relevant customs reporting requirements and obligations, they will still need to plan to extend their business model to incorporate the same changes in respect of their existing intra-EU supply chain.

The main concerns include new customs reporting requirements, continuity of supply chains, the administrative burden and new statutory obligations. The U.K. government has estimated increased import and export declarations will cost 6.5 billion pounds ($8.3 billion), with over half relating to import declarations.

Planning Ahead

To manage the risk of increased costs, and avoid paying duties unnecessarily, U.K. businesses must be proactive. The first stage is to ensure your business has the correct commodity codes and any export licenses you need trade. You must also make sure you know all the details about customs relief you may qualify for.

You need to register with HM Revenue & Customs (“HMRC”) for an Economic Operator Registration and Identification (“EORI”) number, the unique identification number required to trade with the EU. You must clarify whether your goods require an export license and if they will be subject to any special rules in respect of their movement. The commodity code for your goods will determine the amount of U.K. import duty payable, whether that duty can be suspended, if you can apply for any preferential duty rates and whether you may need an import license.

The next step is to establish the correct customs procedure for your goods. Businesses need a clearly defined process for making declarations to HMRC. If you decide to use a third party, such as a freight forwarder or a customs broker for this, you must provide clear instructions on the treatment of your goods.

There are customs procedures which may provide relief from duty, for example use of or approval to operate a Customs Warehouse facility, Temporary Admission, Inward or Outward Processing Relief.

The challenge is to establish if you are eligible to apply but it is essential to investigate. If, for example, you currently acquire goods from Germany, apply a process to these goods in the U.K. and then sell the finished product to customers in France, you will not suffer any customs duty or value-added tax (“VAT”).

Post-Brexit, it is possible that this type of supply chain will incur customs duty at the time of entry to the U.K. and then again when the goods move back to France, with the final sale. If customs duty on these goods was 5 percent then the business would suffer a big hit to its profit margin as customs duty is an outright cost to the business—it cannot be recovered from HMRC.

In this example, Inward Processing (“IP”) relief may be a solution to prevent a double customs duty charge in the future. By implementing IP, the goods are relieved from duty and VAT on entry to the U.K., provided the goods leave the U.K. following processing. This existing regime currently operates where goods are imported from outside the EU and exported outside the EU following processing. This regime will be particularly important post-Brexit.

International Commercial Terms (“INCOTERMS”) or shipping terms agreed between contracted parties, i.e. the supplier and purchaser, are also important, as they may determine the risk and liability for the movement of goods, including liability for any U.K. import duty. If you import direct into Europe, VAT registration in the country of importation may be necessary.

Another measure to consider is implementing a customs duty suspension regime.

It takes time to implement these schemes, but it can be well worth the effort. Being part of this regime sends a message that your business is proactive, compliant and forward thinking, supporting your future success.

To make the best of the changes ahead, you will need to equip yourself with a comprehensive understanding of customs arrangements and plan carefully for the inevitable changes.

Alison Horner is Indirect Tax Partner and Patrick King is a Tax Partner at MHA MacIntyre Hudson, U.K.