With just over three months to go until the EU transition period ends, are businesses ready for it?
Brexit has finally forced its way into the headlines and is mounting a challenge to Covid-19 for our attention. The first trade deal has been signed, and once controversy abounds as the Government proposes to break international law.
With the Brexit transition period due to end on 31 December 2020, there will be massive changes to both business and finance operations. Whether the UK and EU sign off on a new trade agreement or we default to WTO rules, these areas are likely to be affected:
- Supply chains (e.g. customs duties and imports/exports)
- Employment (current EU national employees and future hiring)
- Tax and VAT
- Audit and financial reporting
- Business travel
AAT has updated its Brexit guidance and is watching developments.
Businesses across the country need to be prepared for every eventuality, including a no-deal Brexit. But are they?
Clients are beginning to panic slightly
Jamie Smith, chartered accountant, Tax Rebate Services
Clients have been mostly unprepared for Brexit because surviving Covid-19 has taken centre stage. But now that Brexit is imminent, we’re seeing a lot of clients panicking slightly and realising they may need to make changes. The uncertainty around Brexit is our clients’ main concern, as no one knows what the final deal will look like. Ireland is a concern too because trading there will be completely different should a no-deal Brexit go ahead. Clients are also unsure of how Brexit will impact their business.
Throughout the Brexit process, we’ve kept up a steady stream of communication and advised every client of changes they may have to make in order to deal with a variety of potential outcomes from the Brexit deal.
Next steps: We’re keeping clients up-to-date with all the latest industry changes while drawing their attention to areas they need to concentrate on should a no-deal Brexit occur. We’re also offering a free advisory service.
Verdict: Clients have been in survival mode during the pandemic but now they’re starting to look at the potential changes they might need to make.
Continued Brexit uncertainty is making some clients reluctant to prepare
Gerry Myton, partner and head of indirect tax, Streets Chartered Accountants
Some businesses are prepared for our exit from the EU, but many simply are not. We are starting to see that most are awakening to the reality of Brexit, but committing to doing something is proving more difficult given the current economic turmoil caused by Covid-19 and the associated costs involved in preparation.
Combine that with previous false dawns in the Brexit process last year and you can understand a reluctance given the lack of certainty regarding a free trade deal and the further indecision the Government provided earlier this week. Business needs certainty and at the moment, that is lacking.
The main issues we are finding centre on clients who sell B2C cross border into the EU. The postponement of the Import One Stop Shop until 1st July 2021, at the earliest, is causing concern and particularly, how to minimise disruption for customers in the first six months of 2021.
Next steps: We have put together a number of podcasts plus factsheets to assist in helping them understand the situation.
Verdict: Uncertainty around Brexit trade deals has made it difficult for clients to adequately prepare and the lack of face-to-face time with clients to explore issues and provide solutions hasn’t been helpful.
Businesses are rushing to Brexit-proof their overseas e-commerce operations
Nick Farmer, international advisory partner, Menzies LLP
The ongoing trade negotiations and withdrawal agreement are now headline news again, and this has brought Brexit back into focus, so there’s a lot of activity.
We have seen UK businesses looking to strengthen their e-commerce operations and wanting to reach into overseas markets for the first time. This has led to them seeking advice on cross-border tax and VAT implications.
Importers and exporters are also seeking help to digest the new Border Operating Model that sets out the UK’s approach to the border from 1 January 2021. This is a complex document, dealing with customs declarations, duties and VAT. There are various actions businesses should take now to prepare for the staged introduction of these customs controls in order to avoid post-Brexit disruption.
Mark Rowland is a journalist and former editor of Accounting Technician and 20 magazine.