Brexit – where next?
by Margaret Pinder, Head of Market Intelligence, Hill Dickinson
Now that the Government has achieved sufficient progress in the Brexit negotiations to reach agreement to progress to stage two, this is a good time to review what this means for your business going forward.
We know that although 87% of businesses have considered the impact of Brexit at board level, this applies mainly to large businesses, and while one third of the largest firms have already engaged external agencies such as ourselves to manage their Brexit response, the same is true for only 10% of other businesses.
With Brexit day still set for 29 March 2019 there is a lot companies can be doing to prepare. Even though the only outcome for which the consequences can be anticipated with any certainty is a hard Brexit with no deal, this is a worst case scenario, and we are now looking at a more positive picture in terms of resident EU workers’ rights, customs and trade access, and a willingness to preserve the economic and trading status quo in so far as possible.
The CBI reports that 14% of businesses have already hired additional staff and that pressure on warehousing is almost at capacity as firms are building inventory and stockpiles of goods and raw materials. Indirect taxation is also going to be an area of substantial change for the next two years. The present VAT place of supply rules will be substantially changed following the review by the Office of Tax Simplification and the EU Commission’s review of VAT. This has the potential to create significant problems for many businesses supplying goods and services in the EU and UK. How closely our future regulation will be aligned with the EU is also a crucial consideration for any business with complex supply chains or that is currently heavily regulated such as the pharmaceutical industry and the wider health sector. These are just a few examples of the effect Brexit is having on behaviour in the markets right now.
Planning is important, but informed planning is crucial. We can help you look at the situation for your existing employees both in the UK and other member states and advise you on what the proposed ‘settled status’ for these workers is likely to entail. Similarly now is a good time to revisit your terms and conditions to ensure they are Brexit-ready, whatever the final outcome of negotiations may be. Customs duty and the possibility of tariffs alongside changes in the place of supply rules are also factors to be looked at now rather than down the line. Travel companies are especially vulnerable to factors that may affect ease of movement of both people and craft.
Not only are we here to help, but we are also keen to hear from you what your concerns and needs are so we can feed this into shaping our strategy to best support our clients through a time of no small uncertainty, but also to feed back to government both directly and through our involvement in key business and trade associations not only to understand where policy is going, but to help drive a positive outcome for trade in the UK.
VAT – how low will the Chancellor go?
Iain Donaldson, our tax specialist has also written on the implications of likely changes to VAT in response to Brexit implications. You can find his article, originally published in Taxation magazine, on our website.