Although the impact is still uncertain at this stage, preparing the ground work for change is good business practice and it is certainly advisable to undertake a structured review of your existing circumstances in order to assess the risks and opportunities inherent in the business. Through this process of evaluating your existing structures and operations, you will be better positioned to assess and monitor the potential impact of Brexit and ultimately be able to take action when the time is right.
To help you get started, we have identified some of the key questions split over five of the key areas that will need to be addressed by many businesses prior to Brexit.
Brexit Infographic Headline: Trade
The nature of the UK’s future trading relationship with the EU will be crucial for businesses that supply goods or services. Uk businesses that buy or sell goods within the EU are likely to suffer increased costs and administration if the UK leaves the Single Market (i.e. so called ‘Hard Brexit’). This is because good moving between the UK and EU would become subject to Customs procedures and the simplified VAT rules for intra-community trade would be lost. Those that supply services will also need to consider the new regime and any access restrictions or new regulations that may apply.
Brexit Infographic Headline: Employment
The free movements of workers is one of the founding principles of the EU, and abolishes any discrimination based on nationality between workers of member states as regards employment. This freedom of movement has undoubtably been a significant factor in the UK’s decision to leave the EU, and as a result it can certainly be anticipated that there will be a people impact arising from Brexit.
Brexit Infographic Headline: Finance
As with all change, it can be expected that there will be some winners and losers pst Brexit. For some there may be cash flow impacts, perhaps arising from reduced consumer spending and higher costs and therefore it is important to review your existing business plan and consider remodelling it for possible Brexit scenarios.
Brexit Infographic Headline: Structuring
Much has been heard about the impact of trade taxes (customs duties and VAT) of the Uk being outside the customs union. Direct taxes (corporation tax and income tax) have been left a bit in the shadows of individual member states and consequently are already imposed by UK law. However, our direct tax rules have had to be drafted to comply with EU law, and companies are still likely to be affected by the loss of access ti certain EU Directives and rules. For instance, if a UK group has subsidiaries in the EU, there may be an increase in the withholding tax cost of repatriating funds to the UK.
Brexit Infographic Headline: Operational
At the heart of all businesses are the relationships with customers and suppliers. Although there is still much uncertainly over the impact of Brexit, it is important to take time to access the economic viability of these commercial relationships as it is the life blood for the business.
For more information on the above or to talk through your post-Brexit options, contact Menzies.