All you need to know about preparing for Brexit

on September 16, 2020

On 12th December 2019, the Prime Minister of the United Kingdom won a majority in the General Election and vowed to ‘get Brexit done’ by 31st January 2020. It was a time when it seemed nothing could override the prominence of this promise, as the British public wanted results and did not want to endure anymore delays in the process. However, a political pledge of such significance quickly lost its standing, in a way that no one had quite anticipated.

Conversations steered away from a deal or no-deal regarding Brexit and suddenly face masks and hand sanitisers were the main topic of discussion, as a global pandemic presented itself. Undoubtedly, covid-19 posed a great threat on our society and forcefully claimed all aspects of people’s lives, from employment and travel to social gatherings and family life. Thus, the virus has been deemed as the greatest adversity in modern times as it is somewhat unpredictable and does not discriminate. However, small businesses were disproportionately affected, and the damage will be long-lasting. Agreeably, the government did put measures in place to support the most vulnerable, yet it must be noted that the United Kingdom did not take the warning signs seriously enough and acted too late.

In a world where being furloughed, wearing a mask whilst doing a weekly shop and maintaining social distance from others has become the norm, a further risk cannot be overlooked. This is the risk of the United Kingdom acting too late once again, but this time in regard to Brexit and finally ‘getting it done.’ With less than three months left for the United Kingdom to officially leave the European Union, we as a country must be well prepared in order to try and endeavour to mitigate the consequences. Covid-19 has taught us that we cannot afford to not be proactive and this time there is no room for excuses.

As stated in the FS report, there are more risks than opportunities apparent with Brexit. Firstly, the economy will be condensed due to coming out of a single market. This means the customers and suppliers will be limited and for some businesses, it will require complete restructuring and reform. Most of the UK’s biggest trading partners are in Europe and so this will have an immense impact on the economy.  Additionally, there will be a shortage in the labour market and businesses must go through a certain red tape for employing EU citizens. Though EU citizens can easily apply for settlement within the UK, free of charge, there will be a space to be filled within the labour market.

Another aspect of the businesses which will be affected is the extra cost they will face from the import and export tax. This cost would be passed to the customer to some context and hence prices in the current market will rise. Unlike previously, where goods or services sold in the UK had VAT, this could change significantly. Businesses might have to change how they operate their VAT and this would require significant changes of the business strategy.

There are three key areas that are most likely to impact your business:

  • The government will introduce postponed accounting. Businesses will be able to account for import VAT on their VAT return, rather than paying import VAT on or soon after the time that the goods arrive at the UK border.
  • When selling to EU consumers, distance selling arrangements will no longer apply and UK businesses will be able to zero-rate sales of goods to EU consumers. However, these goods will be treated by EU member states as non-EU with the associated import VAT and customs duties.
  • UK businesses will continue to be able to zero-rate sales of goods to EU businesses but will not be required to complete EC sales lists. However, evidence of the sale will still need to be retained (how it needs to be recorded has not been confirmed yet).

As above, these goods will be subject to the associated import VAT and customs duties – which may vary depending on the EU member state.

Businesses will need to apply for EORI number to move goods to and from the EU market. You will not usually need an EORI number if you only provide services and move goods between Northern Ireland and Ireland. Without an EORI number, businesses will incur additional costs and delays. For example, if HM Revenue and Customs (HMRC) cannot clear your goods and you may have to pay storage fees. Businesses with the appetite of using EU market as a source of buying and selling goods will be affected without an EORI number.

We as a business consultant and accountant make sure that our clients are fully equipped to deal with the changes. We constantly update our clients with the latest information and make sure they are well prepared for the upcoming changes. This varies from implementing HR policies, making sure EU staff are fully complying with new settlement scheme, to applying for EORI number for them. We also assist them in restructuring their business strategy and assist them to reach their organisational goal(s).

We at Outsourced ACC are available to speak to our clients and guide them all year round. Our all-inclusive fee means you do not have to worry about additional charges every time you call us or send an email. Contact us today by email or phone and see how we can help you grow!

Written By Kazi Ashraf

Filed under  Blog 

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