Whilst a deal has been agreed between EU and UK negotiators said the deal is currently likely to lack enough support in parliament to be accepted, with some MPs now resigning and casting votes of no confidence in the current leadership.
As a no-deal scenario becomes more and more of a possibility, businesses should ensure they are prepared for any outcome. Recently, the Government released detailed guidelines for businesses in the event of the UK leaving the EU without a deal.
Find out more about the guidelines and how you can ensure your business accounting is prepared in our latest blog post.
The guidelines released by the Government are very comprehensive, they cover off everything from importing and exporting of goods and meeting business regulations through to consumer rights and studying in the UK or EU. It is worth remembering that these guides only apply to a no deal scenario, and will not be valid should the current deal be passed through parliament.
Business Accounting in a No Deal Brexit Scenario
Whether you handle your accounting in-house or outsource it, you need to ensure that you or your accountant is fully prepared for a no deal Brexit scenario.
VAT – VAT (20%) is payable on most goods and services sold within the UK and EU. Following a no deal Brexit, the Government aims to keep VAT procedures as close to as they are now as possible. However, there could be changes to VAT payable when importing and exporting goods from the EU.
Importing and Exporting – Businesses can currently trade freely between EU member states, meaning there’s no obligation to make customs imports and exports declarations. In the event of a no deal, import and export declarations would be required for goods moving in and out of the EU, customs duties will also be payable.
Account and Audits – The rules which govern how UK companies report on their financial activity, corporate governance arrangements and auditing are set by the EU. In a no deal scenario, accounting and corporate reporting will remain mostly unchanged, but UK auditors and audit firms will need to consider that UK auditing qualifications may no longer be recognised in EU member states.
Professional Qualifications – Currently, professional qualifications are mutually recognised by all EEA countries under the Mutual Recognition of Professional Qualifications (MRPQ) Directive. In a no deal scenario, individuals and businesses will need to check the host state’s national policies before being able to provide services in these countries.
The MRPQ governs professions including nurses, midwives, doctors, dental practitioners, pharmacists, architects, veterinary surgeons, lawyers and commercial agents.
Data Protection – Data protection in the UK is governed by the EU General Data Protection Regulation (GDPR), something that many businesses in the UK will be fully compliant with. Whilst the Government has indicated that GDPR would be incorporated into UK law in a no deal Brexit scenario, businesses must be aware that EU businesses will not be able to transfer personal data into the UK unless an appropriate legal basis has been identified.
Tips For Preparing For a No Deal Brexit
- Carry out a no deal Brexit risk assessment to highlight what area of your business is likely to be impacted.
- If you import or export goods from the EU, map out your supply chain to identify where you may be due to pay additional tariffs.
- Talk to your accountant or in-house team to ensure they understand how a no deal Brexit will impact the day to day running of company accounts.
- If you import or export goods, you may consider increasing your inventory or storage space to combat any supply chain delays in the event of a no deal.
- Be wary that potential clients may delay their decision-making process because of Brexit uncertainty.
- If you employ a high number of EU nationals, you should take steps to ensure that these employees are aware of the next steps they need to take to continue working in the UK.
- Identify any industry-specific EU laws which currently apply to your business. You may find there are Government consultations in progress which you can contribute to.
- Sign up for alerts from GOV.UK on Brexit.
Talk To The Experts
At FCF, we understand that despite all the coverage and speculation, Brexit can still be a complete unknown for businesses. If you’re concerned about the accounting implications of a no deal Brexit, we can help. For more information, give us a call today on 0117 379 0810.
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This post was written by Steph Roffey