Planning for Brexit

British ducks for British people
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Philip Fisher
Columnist
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This article comes from Edinburgh, where I'm making my annual pilgrimage, but rather than regaling readers with show suggestions after only a couple of days it seemed more appropriate to address a serious threat to the profession that should be worrying us all.

Suddenly, the departure from the European Union is months away rather than years. Even so, unless any of you have more information than is readily apparent from the media, nobody has a clue about what the consequences are likely to be either in the very short-term or in years to come.

There could be anarchy, there could be a financial bonanza or, quite possibly, nobody will notice the difference at least for a while.

My question today is what firms are doing to ready themselves for an event that could be the biggest change in living memory.

Staff could disappear, clients go under, while tax law could change significantly before too long and auditing regulations may also follow suit. The economy may also be in for a significant jolt with interest and exchange rates going mad.

In other words, every aspect of our businesses might be affected to a degree within a year from now, and much more significantly within two to three.

If you happen to be based in Northern Ireland, the consequences could be even more extreme.

While I have no doubt that there are many discussions going on behind-the-scenes at larger firms, it would not surprise me to discover that partners in most smaller practices have done little more planning than to buy a shovel with which to dig up some sand to bury their heads.

Perhaps the best way forward is to ignore Brexit completely and hope that it goes away or happens without our noticing. However, Bernard Jenkin's millennium bug analogy has caused much controversy, not to mention a great deal of derision.

At the other end of the scale, it would be possible to come up with the equivalent to a nuclear bomb shelter at the end of the garden, providing protection that may never be necessary and could also be the source of much laughter from your neighbours.

This article is really exploratory since it seems likely that many readers will be desperate to get tips from any of their peers who have already addressed this matter in a thorough and detailed fashion and have the answers to any of the questions raised or maybe even all of them.

About Philip Fisher

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By DJKL
08th Aug 2018 15:20

Get Costco card and use for purchases of bulk toilet rolls, tinned food and dried food. Will pack up practice of accountancy and use my study as the new store room.

Reapply for my shotgun certificate (I let it lapse years ago) and then see if my late father's ex business partner, whom my dad's shotgun was passed on to, has any actual use for it or will give it back to me; given his somewhat scathing comments of it as being more appropriate as a bit of replacement pipework for a plumber and further comments as to how on earth my father ever hit anything with it I suspect whilst he may have it in his gun cupboard it rarely gets an outing.

Arrange to book a ferry crossing to Sweden next Easter rather than flights- given Edinburgh schools finish on the 5th April I want to ensure I can get away with the car rather than being sat here with all the grounded flights- given lorries backed up at the ports will likely do Newcastle/Imujden and leave plenty of time for traffic delays.

Transfer two year's housekeeping to our Swedish bank account- given the way exchange rate has been twitching maybe I should actually do that later this year

Rewatch Survivors (original series) DVD box set as training.

Regret not buying this property:-

https://www.scotsman.com/property/cold-war-bunker-sale-scottish-borders/

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to DJKL
08th Aug 2018 15:49

Sensible stuff. That a cliff edge Brexit will be a massive problem there is no doubt. The question is how massive a problem it will be and it would only be sensible to assume the worst.

Expect full blown panic buying of non-perishable food etc. if there is no solution in sight by this Xmas (a country is only 3 (or according to M15 4) meals away from anarchy I think the saying goes).

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By DJKL
to Justin Bryant
08th Aug 2018 17:05

I should also have mentioned the changes I have already made in the investment focus of my SIPP ( omitted as in the main these are already done-couple of ITs ,still to consider encashment) and the general, without impacting lifestyle, diversification away from UK based assets and earnings.

The other major plans are ensuring one child gets married to his US citizen girlfriend ( not sure either of them are actually that keen on the idea, but so what, needs must, "it is a far far better thing I do" etc and finding a EU/ROW spouse for my daughter.

The final plan is seeing if my MIL will apply for Irish citizenship (She had Irish grandparents )so my wife can then get same (Irish mother-not sure this really works), not that we will move to Ireland (possible frying pan to fire) but it will let us disappear to Sweden.

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to Justin Bryant
09th Aug 2018 11:49

Trouble with anarchists is that for some reason they aren't great at organising things!

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09th Aug 2018 10:31

I'm quadrupling the number of vegetable plots in my garden and investigating herbal remedies for the medical conditions I currently need drags for.

The Profession? Probably "Inert till react", it's served it well for a century or two.

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09th Aug 2018 11:30

Already shut my UK practice and moved to France!
(working for another UK practice here) I'd rather the French tax man has my taxes than fund the Brexit insanity

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By Locutus
09th Aug 2018 11:50

What am I planning for Brexit?

Probably sitting in a pub in my home town, with several Brexit-voting friends and (if he dares to come out) another good Remainer friend.

Conveniently, Brexit takes effect at 11pm on Friday 29 March and we can have a New-Year style count-down just before the pub closes.

Deal or no deal, the world will keep spinning. There was life before the EEC/EU and there will be life after it.

How will it affect the profession? Probably not much initially. Of the three things you refer to:

- Staff from the EU won't disappear as there have, quite rightly, never been any plans to deport anyone.
- VAT and other taxes will initially be as they are now. VAT will probably diverge over time.
- I doubt whether "taking back control" of auditing standards is high on anyone's list of things to change, so the status quo will continue for some time.

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10th Aug 2018 10:03

Looking forward to it immensely! I’m sure life will go on in some shape or form....

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10th Aug 2018 11:05

I think, as accountants, we are used to dealing with change - virtually none of it makes our lives easier - at least not at first. So I'll start planning for it when I know what it looks like. With MTD and the private sector IR35 roll-out coming up, we already have enough on our plates to worry about.

Churchill said 'keep buggering on'. What else can one do?

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10th Aug 2018 14:34

Brexit is going to affect everyone but there isn't a great deal any one of us can do about it. Two weeks after Brexit (if current timetable is maintained) is MTD which proportionally will have a much bigger impact on accountants and is something we can plan for and hopefully can still influence. Thus most of us are concentrating on MTD and not Brexit.

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By ShayaG
to kevinringer
10th Aug 2018 16:33

What happens to clients selling goods to EU? What about clients importing goods?

I suspect you are focussing on MTD because the magnitude and scope of what is fast approaching is quite unlike anything we have ever seen before in our lifetime.

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By ShayaG
10th Aug 2018 16:12

Regarding VAT, I suspect that the EU will impose vat (and import duty) on all UK goods at the border.

I'm certainly stockpiling food, as prices will rocket.

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11th Aug 2018 22:17

Currently on holiday in the South of France where for the first time that I can remember food and fuel prices are higher than the UK.
It is a bit difficult to prescribe generic advice when the EU is so slow to set out the likely relationship after Brexit. Our clients and ourselves will all be effected in different ways. For the fascists and bullies in Brussels the political punishment for leaving will be more important than a successful economic arrangement post Brexit.
Perhaps the best advice is to explore opportunities within the UK and outside the EU until the outcome is clearer.

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to Knight Rider
11th Aug 2018 23:33

That’s OK our lot are bound to tell us what to expect after Brexit and we have bullies and fascists apleanty, after all they are the ones who got us into Brexcrement in the first place.

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to Paul Scholes
12th Aug 2018 23:03

Oh dear. More than 2 years into the post referendum boom with the stockmarket at record levels, unemployment at record lows, the budget deficit almost eliminated and growth picking up in Q2 the relentless pessimism of the remainer doomsayers continues.
The people have decided, a world of opportunity awaits and there is plenty to be optimistic about.

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By DJKL
to Knight Rider
15th Aug 2018 14:09

That is the world of opportunity on WTO terms until, after a few (5-15 say) years we sign up to all these wonderful FTAs with economies whose GDP per capita suggests may struggle to buy our products in bulk anyway.

And that is of course whilst awaiting the disentanglement of those regulatory processes that enable our goods to even be shipped cross border.

Sounds wonderful, I will appreciate it immensely in my retirement.

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to DJKL
16th Aug 2018 11:14

The EU will have some disentanglement to resolve to allow its goods to be shipped - can it be so difficult to come to an arrangement? No one wants trade to be compromised. The next 12 to 15 years will see a growth in wealth in many other countries as the moribund EU gets left behind.

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By DJKL
to Knight Rider
20th Aug 2018 11:32

DISENTANGLEMENT
Re can it be so difficult to disentangle, yes it can, lets see the 80 odd notices due this week to see how realistic they are and the the real pinch points.

A quick read of say http://eureferendum.com/ (Dr Richard North's website-hardly a remain supporter) will really give you a flavour of some of the actual technical difficulties inherent (Try the searchable archive), none I suspect are impossible to sort but a fair few now look impossible to sort by next March.

GROWTH IN WEALTH
Fairly easy bet that, of course developing world will continue to catch up at an aggregate level.

The key though, re exports, is at the individual level re consumer goods you need individual demand (and means to pay) for that western made widget to be demanded in whatever country we are exporting to, that means a big enough part of that population with the spending power to buy it.

What I have yet to have explained to me is which wonderful untapped markets will Brexit unlock? We currently have access to a fair array of markets via the EU plus access to the EU itself (which we may at outset all lose), slowly more get added (Japan is the new one), why, with lower buying power than the EU as a whole, should the UK readily unlock free access to countries where the EU failed, what are these wonderful markets?

Even if we can eventually access these markets, how long until the door opens, how much lost trade in the interim whilst we wait, what happens to our industry whilst we wait for these markets to open, do they downsize, go moribund like Magrathea awaiting an upturn?

How many business entities in the UK can keep trading with ROW under WTO terms whilst they await some form of FTA, how many months do some of these have before the cash runs out and they call it a day?

ONGOING
The fact is our government has backed itself into a corner re its daft red lines, a modicum of sense would have had us embrace EEA/EFTA as a pathway to disentanglement but instead, for party cohesion purposes, we kept pining for the impossible dream despite being told, over and over, it was not available.

Frankly I am now past caring.

Will it impact my retirement, probably not, as long as I ensure my SIPP has spread its risks outwith the UK (which I have) and of course also owning a house abroad gives some protection re a further Sterling lurch.

Will it impact my children, well son will be coining it in writing new software for the State (Leaving should bring a boom re demand for software developers experienced working on large state projects, which he is), daughter will hopefully have got her Chartered status (planning) secured which ought to make her fairly international if need be.

Will it all be worthwhile, no it will not, in a world that is global the whole concept that one can take back control is frankly a mirage, however if a bunch of politicians can convince a population that somehow they have "regained control" then said population deserves everything that is now coming to them.

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to DJKL
23rd Aug 2018 12:28

You are still pedalling the EU as an economic construct. It is not. It is a political construct masquerading behind economics to undermine the democratic accountability of sovereign states using political rather than military power. The Uk is trying to extricate itself from this unaccountable unelected body and restore parliamentary sovereignty.
Trading with the EU is in the UK's interest but it is also in the EU's interest and we simply don't know if the EU dictators will override their own economic interests to inflict 'consequences' on Britain.
The developing world as well as countries outside the EU will be able to export more to Britain as customs tariffs are removed. This will benefit the British consumer as well as the exporting country who will be able to afford British imports. Foreign trade not foreign aid.
The removal of tariffs will give the EU a problem. New Zealand lamb,for example, will be cheaper in Dover than Calais. Someone will bring it to France through Belfast and Dublin. This will make French farmers very unhappy and they will ask the Germans for an Irish border. Will the Irish succumb?
I don't expect the next few years to be easy but they will be challenging times that give us all new opportunities. Some businesses will make the most of them and others will throw in the towel. Just as they have always done for thousands of years.
Im not sure why EFTA/EEA was not explored more fully but it was probably due to a desire to control immigration. I really hope that we end up with a fairer system that properly deals with immigrants(those who come to the UK to settle permanently), temporary workers,students and tourists.

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By DJKL
to Knight Rider
28th Aug 2018 01:05

You do know the EU already has a tonnage quota agreement with NZ (and is in process re a new trade agreements with NZ as we speak) with zero tariff on NZ lamb into the EU re something like 228,000 tons a year which is not currently all being bought, of which the UK currently uses about 40% of said quota.

So, given EU already gets it lamb from NZ with zero tariff what next?

http://beefandlamb.ahdb.org.uk/market-intelligence-news/new-zealand-quot...

https://ec.europa.eu/agriculture/sheep-goats_en

And of course ignoring tariff issues (which are the least of anyone's worries) we have some of the considerable regulatory issues re our food into the EU, see EU notice to its Stakeholders re Food as an example.

https://ec.europa.eu/agriculture/sites/agriculture/files/docs/notice_bre...

If you say go to :

http://eureferendum.com/default.aspx

and read Dr Richard North's articles re the issues re regulation/ governance , the archive has circa one a day stretching back years ,you might start to pick up on these issues beyond the bland UK press utterances, especially re the timetable if no WA and no extension.

Now you may think this is all Project Fear, but actually Dr North does offer solutions, he is just a leaver who has enough technical understanding to appreciate that none of this connecting the dots can be done in time, in effect to paraphrase him, Brexit is a process not an event.

His wiki will give you a flavour of his credentials:

"He was previously research director in the European Parliament for the now-defunct political grouping Europe of Democracies and Diversities, which included the UK Independence Party (UKIP)."

"At the European Parliament in Strasbourg, North shared an office with UKIP's leader Nigel Farage."

https://en.wikipedia.org/wiki/Richard_A._E._North

If you read his wiki and consider his publication list you will see he has no great love for the EU but from his blog you can see he certainly believes the current Brexit process is heading for disaster.

So, I would strongly urge you read some of what he says and you might then start wondering which of the politicians (who frankly appear to have little real understanding of the details) are being a tad economical with the truth and are certainly out of their depth.

If of interest have a read, if not ignore, totally your choice.

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