How to prepare for Brexit
There isn’t long to go until the Brexit transition period ends and the clock’s ticking. With the prospect of no deal, there will be several unanswered questions amongst the UK’s small business community.
It’s been a tough year for many, and as the pandemic shows no sign of easing up, planning for Brexit might not be high up the agenda. This probably explains why research by the British Chambers of Commerce indicates that just 38 percent of firms had completed a Brexit risk assessment this year, compared to 57 percent in 2019 and 35 percent in 2018.
Whatever the outcome, here are the things businesses can do now to prepare:
Protect your people
Guidance on immigration and the end-to-end process for employing skilled migrant workers hasn’t yet been finalised. In the meantime, review the EU Settlement Scheme’s toolkits and partnership packs.
Employers need to be prepared to deal with the period between the UK’s departure from the EU and the introduction of the new UK Immigration System. Currently, EU citizens resident in the UK can stay and apply for Settled Status up until 30 June 2021, according to official guidance.
COVID-19 has paused business travel. When it’s safe to do so, anyone travelling will be able to stay for up to 90 days in any 180-day period. The government has provided some initial guidance on how to prepare for business travel to the EU, including restrictions and regular updates.
Get ahead of your taxes
Today, firms trading with the EU report their imports and exports every quarter, with a VAT bill calculated afterwards. However, without clear facilitations, businesses face the risk of having to pay VAT upfront during each cross-border transaction.
To counter this, the official guidance on business VAT confirms that postponed accounting will be initiated. Applicable to both imports from the EU and non-EU countries, UK VAT-registered businesses will be able to account for import VAT on their standard VAT Return forms. The official guidance further states that the main ‘place of supply’ rules will remain unaffected for UK businesses. The rules currently determine the country in which a business needs to charge and account for VAT.
Rather than navigating these tax changes yourself, this might be a good time to talk to your accountant. They’ll be much more familiar with changes in legislation and will be best equipped to help you stay on the right side of the law.
Understand how new trade rules affect you
The cost of buying and supplying products is strongly influenced by the duties payable on internationally traded goods. When there’s uncertainty around tariffs, long-term investments suffer, and firms struggle to tie up cash and price and evaluate contracts.
Business owners will need to monitor legislation changes closely and prepare for potential disruption in January. Using an accountant to help with scenario planning and manage cash flow will prove invaluable.
Consider cross-border interactions
Companies who do business across Europe will need to comply with new registration requirements to maintain cross-border trade flows with the EU. According to the official guidance on customs, the free circulation and movement of goods between the UK and EU would cease at the end of the transition period. After that, a new customs and regulatory border would take effect.
A unilateral announcement by the UK Government will see a three-stage approach to introducing customs formalities. In the first stage, from January to the end of March, only certain goods will be subject to full customs procedures upon entering the UK. In stage two, from April to the end of June, all animal and plant products will be subject to sanitary and phytosanitary procedures and appropriate documentation. As stage three starts, from July onwards, full customs procedures for all imported products will become mandatory.
Where to get more help?
The government’s Get Ready for Brexit Checker is a good place to start and will offer more specific next steps depending on your business. As legislation is still uncertain in key areas, we recommend you sign up to the government Brexit updates. British Chambers of Commerce, Enterprise Nation and Federation for Small Business also have helpful Brexit resources.
You can also check out our Brexit Hub for government and product updates for small businesses.
Source: Xero Blog