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Brexit and Construction – what’s the latest?

The UK left the European Union on 31 January 2020.  It’s been close to business as normal during the transition period but this ends on 31 December 2020. At the time of writing the nature of the UK’s future relationship with the rest of Europe remains uncertain.  However, even if some limited trade deals can be agreed by the end of the year, there are steps that UK contractors should be taking now:

  • Brexit clauses seek to apportion the risk for delays and / or additional costs arising from Brexit.  They have been around for a while and are likely to continue into next year whilst all the ramifications of Brexit are worked through.  If they are included in a contract, it’s essential that the potential implications are understood and priced into the job or passed down the contractual chain as appropriate.
  • From 1 January 2021 an Economic Operations Registration Identification number (EORI) will be needed to move goods between the UK and the EU.  Businesses can obtain an EORI number from HMRC.
  • In the event of no deal (or a limited deal) customs duties and / or VAT will apply on transactions between the UK and the EU.  Third party agents can assist with the paperwork for this.
  • Complications and delays with supply chains are a strong possibility, particularly as new arrangements bed in.  Contractors won’t be able to rely on existing ‘just in time’ arrangements. 
  • The UK construction industry is heavily dependent on migrant labour from the EU.  This will be affected when the free movement of workers comes to an end and contingency plans should be put in place.
  • On a more positive note, dispute resolution is less likely to be significantly affected.  Adjudication is a ‘domestic’ remedy and will continue as normal. Court disputes will continue to be governed by the jurisdiction and choice of law clauses in the underlying contracts. 

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