5 Most Common Questions Businesses Are Asking Their Accountants About Brexit
Brexit remains a key concern for businesses up and down the country, even though many people are pretty tired of it by now! Accountants will often be asked similar questions time and again about all manner of Brexit-related issues but here we look at the top 5 and how best to answer them.
1. Our company imports large amounts of a certain product from the EU every year and the business depends on it. How can we make sure we’re Brexit-secure?
Unfortunately there’s no sure-fire way to guarantee your client’s business model won’t change after the UK leaves the EU, however as a business that only imports goods, it is less vulnerable than many UK exporters. Brexit changes, especially in the event of a No-Deal scenario, will likely make business costs higher, with products also taking longer to reach customers. There are however some steps that can be taken in minimising these risks.
In the short term there’s much more risk of delays and disruption at the UK’s points of entry. On top of this, import and delivery times could also be affected by delays and higher prices in the medium term.
Your client could stockpile their imports as a way around these delays, which would help to keep things moving. It’s recommended they also consider how their ordering systems, supply chains and warehousing operations will cope at such a time too.
If the UK doesn’t reach a deal with the EU in time, then your client’s imports from the EU will be subject to customs checks at the border. This means that exporters from the EU will be required to prepare export documents. Your client will need to declare these imports from the EU, and should be registered for an EORI number as well as with the government’s Transitional Simplified Proceedings (TSP) scheme. This would mean they can postpone duty payments and make import declarations legally.
Finally, it would also be worth your client getting in touch with their EU supplier to make sure they have contingencies ready, such as understanding and preparing additional paperwork. In the case of a No-Deal, UK-EU trade will switch to WTO rules, which will likely mean tariffs on goods.
2. We are seriously favouring moving any import export for sales to Dublin or EU mainland, is there any kind of funding on offer for relocating my company due to Brexit?
Although some EU cities have become particularly attractive to UK businesses looking to relocate, there is no EU or UK funding on offer at present for making such a move.
3. Is there a checklist I can use to help me understand what I need to do to prepare for Brexit?
Investing time in planning for the changes Brexit is likely to bring is a positive move for any UK company to take. Although the terms of Britain’s exit are still being worked through and negotiations taking place, there are steps that companies of all sizes can take to plan ahead.
The Chambers has provided a straightforward checklist that clients might find useful to download and print. It’s been prepared on the back of recent survey findings, which in fact suggest that a large number of firms are actually taking no action at all; they’re simply watching and waiting. However, this won’t work for everyone, and for many businesses preparation is the key to survival.
4. Will I still have to pay VAT after Brexit? If so, what will change?
It’s a pretty certain fact that UK companies will face increased complexity and costs post-Brexit.
Companies will need to account for VAT on goods exported to the European Union as they cross the border. This could potentially lead to significant issues with cash flow (although the government has already said that VAT on imports from the EU into the UK will remain payable when the next quarterly return is made).
Neither the European Economic Area (EEA) nor the customs union incorporate EU VAT rules, so cross-border VAT post-Brexit isn’t an issue. Any simplification introduced after the UK’s exit is still likely to come with conditions however. This could mean a heavy burden for small and medium sized companies in particular who may not have the skills or resources needed to deal with the extra complexity.
5. My company has previously been in receipt of R&D Tax Credits. Will it still be able to claim them the relief after Brexit?
Obviously it’s wise to tread carefully here as nothing about Brexit is set in stone, however initial signs are very good. The government has recognised the importance of stimulating company growth in the UK via R&D Tax Credits, having launched the scheme in the year 2000. It’s been a very successful initiative overall, with £1 of R&D tax relief leading to £1.53 to £2.35 back in expenditure, which not only stimulates the UK economy but fuels innovation too.
The government has also previously made clear its support for R&D Tax Credits back in 2012 when it raised the cap on payable tax credits. This further showed a commitment in the 2017 Autumn Statement when the RDEC tax relief was increased from 11% to 12% for eligible expenditure incurred after the 1st January 2018.
The good news in general is that R&D Tax Credits are still recognised by the government as being incredibly valuable to UK businesses, and we see no reason at the moment why Brexit should change this.
Has your company undergone any exciting new research, development or innovation work recently? It could be eligible for a sizeable rebate on its Corporation Tax bill. Find out more on about R&D Tax Credits on our website.
Need further advice?
Brexit continues to bring big uncertainties for many businesses, but raising funds through R&D Tax Credits could help massively towards preparations. If you’re an accountant that deals with innovative companies undergoing any R&D work then it’s well worth flagging up the R&D Tax Credits scheme with them. The process of applying for R&D Tax Credits however is not straightforward. The requirements can be complex and mistakes can be incredibly expensive - but this is where we can help.
Call us today on 020 7118 6045 or use our contact page so we can work alongside you in offering your clients the best R&D advice possible.