With the Brexit Deal there are changes to the requirements around product and compliance with the Construction Products Regulation (CPR).  The EU will still require goods manufactured in the UK to be CE Marked and a new UK domestic regime will cover products placed in the UK.  The technical requirements for these goods will remain broadly the same on 1 January 2021 as they are now, however, we will see the introduction of the UKCA marking and a system of third-party conformity assessment by UK-recognised approved bodies, in place of the current EU system of notified bodies.  A separate mark exists also to cover the special arrangements for Northern Ireland.  The UKCA and UKNI marks will become mandatory from 1 January 2023. 

Demystifying Product Marking

FIS guidance on Conformity Marking

Latest guidance on UKCA marking can be read in full here: UKCA Implementation Guidance (November 2021).

The Construction Leadership Council Regulatory Reform working group remains concerned about the following areas:

• Impending date for CA mark CE Mark transition to end versus state of readiness within the sector
• Can current UK Approved bodies and testing houses cope with all their retesting and certification work needed to implement the CA Mark
• When can historical data be used and when cannot it be used
• Potentially limiting and confusion in protocols for sub-contracting testing
• How are change can be implemented in existing long term contracts
• The definition of batches when it comes to transition dates
• Clarity over numerous issues related to the Northern Ireland protocol
• What happens with components of a CA marked products that could be CE marked and what happens when a component needs replacement
• The rules related to rebadging be used and how stock needs to be rebadged
• Whether and when will EU provide clearance for EOTA guidance to be used
• Clarity on whether the Secretary of State has to publish European Assessment Documents and guidance to support the UK Approved Bodies in issuing UKCA marking

To highlight the extent of these concerns the CLC has written to the Secretary of State – you can read the letter here.

The Construction Products Association (CPA) is supporting FIS Members (through our membership of the CPA in tracking outstanding issues, this excellent register helps to keep track of where negotiations and guidance are creating challenges)

Outstanding areas of BREXIT concern

Latest guidance on UKCA marking can be read in full here: UKCA Implementation Guidance (November 2021)

EU exit and the Northern Ireland Protocol

Rules of Origin determine the economic nationality of a good under a Free Trade Agreement, it is important to remember that the new Deal with the European Union covers free trade on goods manufacturered in the UK or EU respectively, it does not cover goods that are traded through the UK to the EU or visa versa.

Simplified Guide to Rules of Origin

Businesses in Europe will need to make customs declarations when moving goods between the UK and the EU.  If European businesses have not completed the right customs processes their goods will not be able to cross the EU border.

The Deal means less friction, but not frictionless trade.  New paperwork requirements and changes to the VAT rules apply if you are importing or exporting products and, subject of rules of origin, tarriffs may apply.

HMRC have provided answers to some of the most frequently asked questions on the new trade rules.

1. Customs processes are complicated. Who can help me complete them?

Most traders find that they need specialist support to help with importing from or exporting to the EU. For instance, you might decide to use a customs intermediary.

A customs intermediary is someone who makes customs declarations for you or your business. This could be:

• a freight forwarder – a company that helps their clients move cargo globally, including supporting the customs process
• a customs agent or broker – these make sure your goods clear through customs.

If you decide to use an intermediary, make sure you approach them as soon as possible, as there is high demand for these services. You can find a list of businesses that can help on GOV‌.UK.

There are still specific actions you will need to take if you get an intermediary to help you with your customs declarations. You will:

• be responsible for paying any taxes or duties owed;
• be responsible for providing details about your transactions to your chosen intermediary;
• need to apply for an Economic Operator Registration and Identification (EORI) number (if you don’t already have one). An intermediary can’t apply for an EORI on your behalf and they will need this to complete your customs declarations. You can register for free on GOV‌.UK. It takes 5 to 10 minutes to apply and you will normally receive it in under a week.

For more information, you can:

• watch these short films about how a customs agent or intermediary can help you and getting someone to deal with customs for you – how freight forwarders can help.

2. My business is located in the United Kingdom and I export goods to EU customers, can you explain how I should account for VAT?

If you sell, send or transfer goods out of the UK you do not normally need to charge VAT on them in the UK. You can zero-rate most exports from:

• Great Britain to a destination outside the UK
• Northern Ireland to a destination outside the UK and EU.

If you incorrectly charge UK VAT on exports of goods, your customers may also have to pay VAT in the country where the goods are imported.

Different rules may apply in different countries. Therefore, it’s important that you understand the import VAT rules of each EU country that you sell to.

You can find out more about exports, sending goods abroad and charging VAT on GOV‌.UK.

3. I send goods from the United Kingdom to my customers in the EU, has anything changed about how I should account for VAT?

Yes. Previously, before the end of the transition period:

• VAT was due on the goods that you sold to your EU customers. If your EU customer was not VAT registered themselves (for example, because they were a private individual) you accounted for UK VAT in the UK. If your sales to EU customers breached an annual distance selling threshold you had to register for VAT in that EU Member State and account for EU VAT in that country.
• If your EU customer was registered for VAT in their own country your business zero-rated the sale as a ‘dispatch’ and your EU customer accounted for the VAT as an ‘acquisition’ in their own country.

Now, following the end of the transition period:

• if you are a business subject to the Northern Ireland protocol, the above rules will still apply.
• if you are a business moving goods from Great Britain to the EU, your goods should be zero-rated exports from the UK and import VAT will be due to be collected from the EU recipient at import into the EU and subject to EU rules.
• different rules may apply in different countries – therefore, it’s important that you understand the import VAT rules of each EU country that you sell to.

You can find more information and guidance about the conditions for zero-rating VAT on the goods you export, and what you should do when you export goods in specific circumstances on GOV.UK

Further information

EU Business Taxes and Tariffs

HMRC Newsletter to support businesses (originally published 3rd Jan, but latest update 19th Feb)

There are additional safeguards and hence rules and paperwork in place if you need to move goods between Northern Ireland and Great Britain and visa versa.  To assist here the Trader Support Service has been established.

The table below explains how points will be allocated for anyone on the Skilled Visa route will work from 1st January 2021, including mandatory and tradeable points.  An individual will need to get to 70 points.

As it stands, no construction occupations are listed on the shortage occupation list.  Plastering and Carpentry and Joinery are  examples of trades recognised on the Skilled Worker list as satisfying the RFQ3+ requirement for skill level of role, but many trades within the Finishes and Interiors Sector (e.g. Drylining, Ceiling Fixing, Partitions Installer) are classified under the Standard Occupational Code 8149 and as a result not deemed to be at an RFQ3+ level making it very difficult to attract new labour from overseas beyond 1st January 2021.

EU nationals residing in the UK prior to 31st December 2020 will be entitled to apply for Settled or Pre-Settled Status and will be exempt from these rules.  Irish Citizens will also be exempt from the points based system.  Responsibility will be on the employer to confirm the status of the worker.

Preparations

There are effectively two important dates to consider:

1st January 2021 – Individuals will need to be in the UK before this date to get settled or pre-settled status the individual (regardless of how they are employed).  Anybody arriving from the 1^st Jan will need to get 70 points to settle here and visa will be linked to employment through the sponsorship process.. 

 1st July 2021 – Individuals who were here before the 31^st December have til to this date to apply for residency under the settlement scheme. 

 In the period Jan to June 2021, employers don’t need to check settled or pre-settled status, just right to work (e.g. passport from EU will suffice), as long as you do this you get a statutory exemption from any right to work issues. 

 From June you will need to check that the individual has settled or pre-settled status.  The onus is on you regardless of whether they are employed or sub-contract labour  to ensure people working for you have a right to work.  As long as an individual has settled or pre-settled status there is no cost implication to the employer.  If they are qualifying through the points based system a visa is required and there are cost implications.  You will need to register as a sponsor organisation to be able to employ new workers (i.e. those who do not have settler or pre-settled status) from the EU in the future.

FIS recommends contacting overseas workers to understand their intentions and pre-empt any problems.  This will also support you in communicating the importance of applying for settled or pre-settled status (we strongly recommend encouraging your workforce to apply for settled or pre-settled status under the EU Settlement Scheme, it is a simple process and can be completed on a mobile phone – more details here). 

A set of potential questions is provided below to support this activity: 

You may wish to consider becoming a sponsor organsiation, to ensure you can continue to employ non UK citizens arriving after the 31st December 2020.  Further guidance on this process has been provided by the Construction Leadership Council (CLC) here. 

Remember you do not need to be a sponsor to recruit Irish citizens or anyone from the resident labour market with an existing right to work in the UK. This includes EU citizens with settled or pre-settled status, and non-EU citizens with indefinite leave to remain in the UK.   You can rely on a third party to manage the sponsorship arrangements, but ultimately thiswill not abdicate all of your responsibilties.

Guidance around Self-employment remains unclear, but there are processes that support the sponsorship of sub-contracted workers (arriving after the 31st December 2020), however, these must be sponsored and guidance currently states. “Where a worker is not your direct employee, we will look closely at the arrangement to make sure you can fulfil your sponsor duties and we will take action against you if we find you are not.”

FIS hosted a webinar on the 1st December to support members in their preparations, the webinar and slides are available here.

Further information

• Access the CLC Guidance on movement of labour is here.
• A full report from the FIS on immigration concerns in the sector is available here
• For further information on Managing Modern Slavery in Construction click here
• For a detailed explanation of the points based system click here
• To book on our Preparing for Brexit: Movement of People Workshop click here

A short explainer document has been produced to help you understand the new rules that are in place for business travel to Europe for work. These rules apply to you if you are travelling for work in Europe regardless of whether you are attending a conference or providing services.

For more information click here

Concerns have been raised about the potential for delays caused by a no deal Brexit leading to the triggering of penalty clauses within construction contracts and inflationary pressure linked to logistical challenges and currency.  The impact on firms within the supply chain, in particular SMEs could be significant.   The position of the Construction Leadership Council is that invoking these clauses should be a last resort, and that clients and firms in the supply chain should adopt an open and collaborative approach to identifying and planning to mitigate these risks before they materialise. however construction remains a contract led sector.  We would encourage early discussions between clients and firms, and for all those involved in the supply chain to both understand the impact and demonstrate flexibility, seeking to ensure that risks are managed by those organisations best placed to do this.

In the short term, firms should take steps to:

• understand their obligations and liabilities in relation to delays included within the terms and conditions of contracts they are party to or considering signing;
• identify the key risks – whether to their workforce, or ability to secure sufficient products or materials to complete the project or work package – and ensure that planning to mitigate these is underway;
• identify whether there are contract terms and conditions linked to the performance of other firms in the supply chain or the delivery of products or materials by suppliers;
• review insurance policies and the cover these provide, and if necessary, notify your insurer of anticipated delays or potential claims;
• identify whether there specific Brexit-related project plans or terms and conditions in relation to the project that are not included in your contract; and
• consider including clauses relating to Brexit and potential delays within contracts that are under negotiation.

This is a complex area, due to the wide range of contractual practices within both the public and private sectors.

More detailed guidance has been prepared by BuildUK for our community here.

Members of the FIS have access to support from BuildUK through our membership.

Build UK have set up a dedicated website for contractors, Are You Ready for Brexit?

The CPA has been monitoring the impact of Brexit on its members and the wider construction industry, this includes both the economic impact and the implications of Brexit on regulatory and policy frameworks and leading some of the key industry groups on standards/regulations and trade issues through Construction Leadership Council.

Visit the CPA Brexit Hub here

List of Brexit activities from the Construction Leadership Council

Additional industry resource

Creating a Stronger Construction Industry Post-Brexit – April 2017

Construction Industry Brexit Manifesto

Brexit Risk Analysis for Structural Steelwork Oct18