Save content
Have you found this content useful? Use the button above to save it to your profile.
brexit

Brexit bonanza for the profession?

by
3rd Jul 2018
Save content
Have you found this content useful? Use the button above to save it to your profile.

Like every other element of industry, including Airbus and Siemens, those of us in the finance sector have probably been wondering what Britain’s decision to walk out on Europe, possibly without any kind of compensatory deal, will do to business.

Uncertainty is rarely good and therefore almost everybody seems to accept that there will be a short-term downturn in the country’s economic fortunes, though some are concerned that this could be ongoing for the foreseeable future.

Staffing is a major issue that will inevitably cause problems if many of our European employees choose to leave the country and we cannot recruit replacements.

However, recently there was an unexpected silver lining under what we must all hope is a temporary cloud. It came from an unlikely source, since the Prime Minister’s decision to grant additional funds to the NHS did not immediately seem to have anything to do with the profession. As she presented it, this was merely a reallocation of funds that we were no longer going to have to pay to Europe.

However, that appears to have been a naïve (or possibly highly political) analysis of the economic and fiscal situation. In fact, very little of the additional funding appears to be coming from any anti-European dividend. Instead, Philip Hammond has made it clear that if we want to spend any more money on the NHS, the only options are to borrow or tax. This puts the government in an awkward position, since it has undertaken to avoid doing either but the decision appears to have been taken to increase taxes, as the lesser of the two evils.

As always, this is a double-edged sword. Those accountants who see glasses as half empty will be quaking at the prospect of having to pay more of their hard earned profits or salaries out in taxes to fund services that they and their families may rarely use.

The glass half full brigade will be drinking toasts from those half full glasses at the prospect of additional work flooding in from wealthy individuals and companies desperate to avoid a massive hike in their own tax liabilities.

The usually vociferous Philip Hammond has been strangely silent about the sources of the additional income. Will he increase VAT? Perhaps NIC is a more obvious target, while higher income tax rates and thresholds could also be on the agenda. These days, few of us advise on all of these areas, most will be have an expertise that should be monetised in coming months and years once the Chancellor of the Exchequer makes his plans clear.

These might be uncertain times, but they are probably also exciting ones.

Replies (29)

Please login or register to join the discussion.

avatar
By Knight Rider
03rd Jul 2018 10:45

The UK is leaving the EU not Europe. It should be quite clear that this decision taken by 17.4M people has not caused 'a downturn in economic fortunes' with record employment and a booming stockmarket.
What is wrong with diverting EU contributions into the NHS? I think most people would prefer their taxes spent in this way than on subsidies for farmers, plaques,flags and fat pensions for the likes of Peter Mandelson.
There are massive opportunities for business and the profession in international trade as we escape the customs union. We should be upbeat, optimistic and excited about exploiting them.

Thanks (4)
Replying to Knight Rider:
avatar
By sculptureofman
03rd Jul 2018 12:39

I'm very impressed with your optimism!

With leaving the customs union and MTD among other things, there is a host of things on the horizon which will offer advisers great opportunities to sell more services to clients.

Ultimately the cost of these things may push clients over the edge (fiscally and mentally), so the ultimate benefits will remain to be seen.

Uncertainty is bad for business, but great for advisers.

Thanks (1)
Replying to Knight Rider:
Tornado
By Tornado
03rd Jul 2018 14:33

"The UK is leaving the EU not Europe. It should be quite clear that this decision taken by 17.4M people has not caused 'a downturn in economic fortunes' with record employment and a booming stockmarket"

Yes indeed.

We are "painfully" extracting ourselves from the clutches of a self-serving and arrogant organisation, the so-called European Union, and preparing to trade freely with the world, and hopefully our friends of all nations across Europe.

The EU is an organisation that cannot be expected to live for that much longer and we are going to be in the ideal position to benefit from that.

There are millions of people in the UK who have never lived in a Free Country and simply cannot understand just how good that felt. They are in for a treat when we leave the EU.

Thanks (6)
Replying to Tornado:
paddle steamer
By DJKL
03rd Jul 2018 15:44

A devaluation of Sterling is always going to give the UK stockmarket a boost. I did very well exiting UK earning stocks before the vote in 2016, in fact 2016/2017 was one of my better performing years., however the FTSE 100 is certainly not a bellweather for the UK economy, just work down by market Cap, something like:

SHELL 8.54%
HSBC 8%
VODA 5.76%
BP 5.46%
BAT 4.07%
DIAGEO 2.98%
ASTRA 2.45%

I could be wrong, but I doubt it, all of the above, whilst listed in the UK (as well as other places), earn most of their earnings outwith the UK, their stock prices have no bearing on the success of UK plc except when they say earn in dollars ( e.g.Shell and BP ) where the devaluation of sterling has revalued upward their earnings and hence their price in sterling. (I know re Shell because come hell or high water I have held their shares for years).

The point is that a devaluation of roughly 14% since June 2016 re the dollar will of course, in Sterling terms, enhance shares which earn in dollars, however even that is misleading re the health of UK plc, because little of their earnings and profits arise in the UK in the first place.

Before getting too sanguine re our leaving , and how it appears to be going, especially re the technical/regilatory obstacles, Dr Richard North's daily blog at eureferendum.com should be visited. He is actually a leave supporter (ex UKIP candidate I believe) , just not the leave we look like getting. Whilst there is no doubt a bit of talking up/talking down / scare, what he writes is erudite, based on sound technical knowledge and pretty alarming at times. He posts each day and is useful place to drop in during the evening to get a take on the day re Brexit.

http://eureferendum.com/

Enjoy,

Thanks (0)
Replying to DJKL:
avatar
By Michael C Feltham
06th Jul 2018 19:12

Quote:
A devaluation of Sterling is always going to give the UK stockmarket a boost

Except the UK is heavily reliant upon import of essentials.

Devalue Sterling and the holistic cost of living rises...

Thanks (0)
paddle steamer
By DJKL
03rd Jul 2018 17:19

So starter for ten with Brexit, will my client (and brother in law), a QP (Qualified Person) be able to continue to act for EU pharma companies re his current ability to sign out batches of drugs from their factories in Europe?

Answers on a postcard because this is circa 50% of his turnover and he does not yet know, RPS does not appear to yet know, and the QP Association had this to say way back, and nothing much has changed since,

"As the role of the QP is already enshrined in UK law, if the UK agrees to abide by EU legislation, there should be no change of the roles or responsibilities of the QP. However, after Brexit unless there is some sort of bilateral agreement it may not be possible for UK QPs to work in Europe, and vice-versa."

Brexit is looking like a real minefield for niche cross border activities if no Single Market rights; hope all those pushing leaving CU and SM find it was all worth it after the dust settles.

Thanks (3)
avatar
By Knight Rider
03rd Jul 2018 17:45

After a quick read this appears to be the usual remainer nonsense about aeroplanes not flying, dogs forgoing passports and medical supplies held up in customs. Oddly we hear much about queues of exports in Dover and very little about queues in Calais (which presumably would be longer given the EU trade surplus).
I am reminded of the Y2K scare stories which dragged on for years and culminated in little more than some flickering traffic lights in Eastleigh.
The UK is perfectly capable of setting its own standards at a higher level than the EU. Fire regulations, food labelling and animal husbandry might be a good start. We don't need EU bullies dragging small traders through the courts for selling fruit and veg by the pound. Produce which arrives on supermarket shelves from outside the EU without any hold ups in Customs.

Thanks (3)
Replying to Knight Rider:
paddle steamer
By DJKL
03rd Jul 2018 18:16

Of course the UK has standards that may, in time , be agreed offer reciprocal recognition, that is not the point.

The point is in the interim, once we drop out of the SM (which currently wraps a lot of such cross regulation together) there is nothing, nada, no rights re provision of these services into the EU, nor cross recognition of governing bodies, so at that particular point in time, given no reciprocal rights re qualifications and standards will be extant, and until they become extant, what then?

I suspect the pharma companies he acts for in Austria, Malta etc will find A N Other, they cannot wait to ship out batches of drugs, no batches they have no sales, so he loses the gig and, 6 -12 months later we sort matters with EU (may be wishful thinking re timing) and he gets to sell his services into the EU again, but not much use then though, clients have gone walkabout, he has to rebuild the EU part of his customer list from scratch.

Imagine losing 50% of your clients on the 30th March to other firms, sitting not being able to act for them for 6 months-12 months- 2 years etc, yet most of them need your services every month/2 months to sign the paperwork so that they can actually earn anything; they are not waiting for you, you are history.

Thanks (1)
Replying to Knight Rider:
avatar
By BlueNose1812
06th Jul 2018 13:10

Over the past month I have bought asparagus from Evesham, Poland and this week Peru. Tescos charged £2 each time. And guess what - they apply the same pricing policy for raspberries, grapes and just about anything else regardless of where in the world it is grown. The days of seasonal price variations and cost of delivery to the point-of-sale are gone. Whether the source is EU or non-EU is irrelevant - after all it is just a tick box on the customs documentation made by the freight forwarder and the application of a tariff or not of a couple of percent.

It is obvious that the hullabaloo about exchange rates, tariffs and import delays is a red herring. We all know that the multi-nationals will manipulate the producers, wholesalers and retailers to ensure that their profits are made regardless. Unfortunately knee jerk politicians dance to their tune and their own prejudices and the media hype it all up as click-bait. Human nature dictates that self-interest is the only thing that matters and whether you are a remainer or leaver, we all definitely have that.

Thanks (2)
By ireallyshouldknowthisbut
04th Jul 2018 10:22

I see the Gamons are out in force in this thread.

Meanwhile in the real economy which relies on high levels of frictionless trade with the EU there is a lot of doubt and uncertainty which is messing up inward investment. The economy is flat lining at a point at the cycle is should be doing well. As above the only reason the stock market is high is to do with the pound dropping.

Through my letter box this morning dropped a letter from AIG, one of many multinationals moving its head office out of the UK but not making much of a fuss about it. Luxembourg for them. I am sure its just fake and part of project fear, nothing to worry about as another few hundred jobs exit the UK.

Thanks (7)
Replying to ireallyshouldknowthisbut:
avatar
By meadowsaw227
06th Jul 2018 11:42

Sometimes it is a bit more than how much sits in your SIP or how much your shares are worth.
Sometimes ones principles and morals may cost you, so be it.

Thanks (3)
Replying to meadowsaw227:
paddle steamer
By DJKL
06th Jul 2018 14:44

Principles are fine, but where they adversely impact sections of society in a real way (job losses , lower tax receipts to meet social costs etc) then they are not without cost to society.

The individual feeling righteous, having stood up for his/her principles ,also requires to take responsibility for the damage he may cause to his fellow citizens by satisfying his/her principles; they are not a free lunch.

Thanks (0)
Caroline
By accountantccole
04th Jul 2018 10:57

Brexit Bonanza?
I might have only skim read this but surely those clients needing "extra" tax planning are already getting some sort of professional advice?
In the meantime I am watching clients relocate to Ireland taking Corp Tax with them, and moving services provided by the local community out of the country.

Thanks (1)
avatar
By Knight Rider
04th Jul 2018 11:30

Companies relocating to Luxembourg and Ireland to take advantage of lower Corporation Tax rates? Its been going on for years. Nothing to do with leaving the EU.
Meanwhile as every day brings news of new investment and jobs in the UK broadening the tax base.
Of course there are some customs and regulatory issues to be resolved and it is in the interests of Europe to resolve them. The question is will the spite of the EU Commissars be allowed to over-rule the interests of its people?

Thanks (3)
Replying to Knight Rider:
paddle steamer
By DJKL
04th Jul 2018 12:31

"Some regulatory issues" is possibly the biggest understatement I have ever heard, there are 40 years worth of regulatory connections to rewire .

(Think large spider's web with multiple stands running via hub at centre, with a lot of these dependant upon one another, and we now need to create a new hub in the web but this one still needs to link with the old hub and every time we disconnect one strand we interupt trade until the new replacement pathway is built)

Thanks (2)
Replying to DJKL:
avatar
By johnjenkins
06th Jul 2018 15:02

Or you get rid of the old spider web which had no flexibility and create lots of little ones that interact with each other on supersonic strandways.

Thanks (1)
Replying to Knight Rider:
By ireallyshouldknowthisbut
04th Jul 2018 14:23

Whilst some business may have been moving anyway, the fear of being stuck in London outside of the EU is a very real one, not least as from a regulatory point they are in breach of all sorts.

To quote
"AIG chief executive Peter Hancock said before the Brexit referendum last year that he’d consider an operations hub in continental Europe if UK voters opted to leave the EU........Luxembourg, a founding member of the EU, offers us a secure location in a stable economy with an experienced and well-respected regulator in continental Europe close to many of our major markets,”

"'This is a decisive move that ensures AIG is positioned for whatever form the UK’s exit from the EU ultimately takes,' says Anthony Baldwin, chief executive officer

From the horses mouth.

Whilst few may mourn the loss of some bankers and insurace co's, they pay a heck of a lot of tax.

Its not project fear, its business people doing what they said they would do.

Thanks (0)
Replying to ireallyshouldknowthisbut:
Tornado
By Tornado
04th Jul 2018 14:50

"Its not project fear, its business people doing what they said they would do."

The world does not exist just for 'business people'. They duck and dive to create as much wealth as they can for themselves, often with scant regard for the people they employ, and the bigger they get, the more power they get, and the worse it is for us all.

Brexit or no Brexit, businesses will change the way they work to maximise profits. This is the nature of business.

What Brexit gives us, ordinary people and small businesses, is the ability to take back control of our country so that there is greater benefit for everyone and less power wielded by a few.

The UK is a democracy and if that unsettles a few power hungry multi-nationals, then so be it.

I am not a socialist, but I do believe that everyone should be able to have some influence in the way that lives are run.

Thanks (5)
Replying to Tornado:
paddle steamer
By DJKL
04th Jul 2018 16:14

I am somewhat more concerned re their employees and the wider economic activity their presence here promotes.

At the end of the day all quoted companies are owned by their shareholders, they may be operated and directed by grasping power hungry individuals, but it is the teacher's pension fund, my SIPP, that endowment policy that own them- business is instrumental to the very fabric of our society re jobs/wages /tax collection and accordingly to our standard of living.

If you want to take a pop at multinationals then that is me, I am Shell, Astra, Unilever, HSBC plus a swathe of ITs covering other parts of the world (especially China), I own parts of all these entities.

The catch with your "taking back control" is the rest of the world will continue to become more and more interlinked and connected across borders, now one can resent this erosion of the Nation State, because it is an erosion of sorts (economic evolution) or one can accept that the weight of the world is rolling in that direction and any country standing against will likely be flattened; think Canute here, the tides will sweep back in and swamp.

The only way you are getting greater benefits for everyone in the UK is by increasing UK GDP, taxing UK GDP to spend said taxes on said people; giving large entities a kicking to pretend to take back control is cutting of one's nose to spite one's face, pointless, futile and self harming.

Thanks (2)
Replying to Tornado:
By ireallyshouldknowthisbut
04th Jul 2018 16:25

Unfortunately Tornado big business pays a lot of tax which is why all the serious economic forecasts who the UK is much worse off outside of the EU.

We had - up until 2 years ago - a really good reputation as the 'goto' place to do business in the EU. The country is chucking that away for empty phrases such as "take back control" which is meaningless.

Its a great phrase by the way. The phrase works, just like Brexit, as it makes no actual specific promises apart from the illusion that your personal perfect world will be one step closer if it happens. Of course YOUR perfect world would be much different from mine, and different from Boris, or Gove's, or Farage's. By promising non-specific items you please a lot of people. But the second you put into words (such as writing it on the side of the bus) something specific it can be easily shown to be untrue.

What is your top 5 rules to be changed what we cant change inside the EU?

I have been asking that question for 3 years and never had a decent answers as it deals with specifics.

Thanks (1)
Replying to ireallyshouldknowthisbut:
avatar
By Knight Rider
05th Jul 2018 10:01

Here are 8:
1. Stop foreign vessels fishing in British waters
2. Eliminate the EU external tariff reducing the price of world produce and increasing choice to benefit the consumer
3. Set up an immigration policy that treats people fairly regardless of whether they are EU citizens or not
4. Reduce the VAT on tampons without David Cameron having to wander the corridors of Europe(seriously VAT policy should be determined in the UK and possibly replaced with a sales tax)
5. Set and enforce British standards in areas such as but not limited to Fire safety, animal husbandry and food labelling
6. Redirect the EU budget contribution to the NHS, defence and infrastructure development
7. Prioritise UK manufacturers and businesses in defence and other government procurement
8. Explore mutually beneficial trading arrangements with countries outside the EU

Thanks (5)
Replying to Knight Rider:
Tornado
By Tornado
05th Jul 2018 10:13

"Here are 8:"

I agree entirely.

Thanks (2)
Replying to Knight Rider:
Caroline
By accountantccole
05th Jul 2018 11:17

My client is reliant on EU funding. If we are no longer entitled to that they would have no business. This was giving them a plan B to keep their business alive

Thanks (0)
avatar
By Knight Rider
04th Jul 2018 16:19

I agree and I like your analogy to the web. So often with the EU we have heard meaningless platitudes about fast lanes, slow trains and top tables.
Perhaps now we can regain some of the pioneering spirit and optimism that will be needed for an independent country. The alternative is subjugation by a foreign power. Exciting times and lots of opportunity for business and the profession. There's a whole world out there.

Thanks (2)
Replying to Knight Rider:
paddle steamer
By DJKL
04th Jul 2018 17:03

Doubt it, our governments will spend the next 10 years rebuilding the web. (Probably not very well-they do not seem to do detail)

The proof re was it VFM will be seen in what we get out of Brexit and what form our relationship takes with the EU post departure, we will get clues re this later this year although the delay re any certainty will likely cost us GDP in the interim that may be lost for good.

I personally had little issue with what we had before but maybe the argument was between the haves and have nots and I am a have, however I really struggle to see this Brave New World.

What I can nearly certainly guarantee is whatever the outcome it will only be the ideal outcome for a very narrow band of individuals within the spectrum of desired outcomes, so a few someones will be happy with the outcome the vast majority unhappy. (From too Brexity to not Brexity enough- somewhat akin to the three bears and their porridge)

Thanks (1)
avatar
By johnjenkins
09th Jul 2018 09:32

All it takes is for the EU to have a bit of flexibility over those coming to other countries to live or work. It's obvious to me and has been since the negotiations started that the EU will not negotiate, although they appear to be going through the motions, and their stance is take what we want or leave. Well we chose to leave and I feel that if there was another referendum now more people (not business moguls) would vote to leave.
What now with DD resigning. Exciting times.

Thanks (2)
avatar
By johnjenkins
09th Jul 2018 10:40

Oh by the way:-

It's coming home.

Thanks (0)
By Mike18
16th Jul 2018 21:16

Seems the Brextremists still believe or pedal all the nonsense about sovereignty and the evil bureaucrats in Brussels. Their dream is of the UK turned into Singapore with the BBC and warm beer by deregulation. It is actually now revealed as a complete nightmare of low wages and civil unrest. Exit from Brexit.

Thanks (0)
Replying to Mike18:
avatar
By Knight Rider
18th Jul 2018 15:41

Who would have thought it could be considered extreme to wish to live in a democracy governed by those we choose to represent us? And what is this remainer obsession with being like somewhere else? Will it be like Norway? or Switzerland? and now Singapore!! Given that Singapore is substantially richer per capita than the UK perhaps some may wish for that. Personally I look forward to a Britain with fewer tariffs,stronger regulations in animal welfare and no regulations imposed by a foreign power. And a privatised BBC. As for the civil unrest we've seen enough of that in the EU. Let's hope that an independent Britain will be compassionate and supportive once unrest breaks out again in the EU as it implodes with the loss of its second largest contributor.

Thanks (1)