In the period since the Good Friday or Belfast Agreement in 1998, the island of Ireland has experienced phenomenal economic growth. Across industries such as film and TV, tourism and hospitality, financial services, technology, pharmaceuticals and data centres, the assertion that it’s a great place to do business is undeniable. 

It has been around a year since the reset of UK-Ireland relations following a meeting between Prime Minister Keir Starmer and Taoiseach Simon Harris, and trade between the island and the UK is booming. Last year, Ireland’s exports to the UK totalled about €26bn and imports from the UK represented about €32bn, or 16% of total imports.

However, challenges remain, many of them fuelled by political and economic uncertainty. With the prospect of US tariffs looming large, the operational realities being faced by clients on the island vary according to sector, supply chain and location of customers – but key themes are emerging, said David Reaney, Partner, Indirect Taxes at KPMG.

Customs obligations and red tape

Brexit has resulted in an increased focus on customs obligations on the island. The Northern Ireland protocol and the Windsor framework has led to an increase in paperwork and red tape, and in some cases a duty cost.

“Beyond the completion of paperwork and forms, we have seen some change in supply chains and, anecdotally, a change in approach, a reduction in the product lines coming in and certain suppliers not willing to deliver,” Reaney said. 

While some clients have taken a wait-and-see response, others have turned to detailed scenario planning to adapt supply chains or enter new markets. “For many clients, the uncertain environment has seen a reluctance to take the big investment step to mitigate the impact. But there's a lot of tactical changes and a lot of work on the data that businesses can do now, regardless of the impact,” he added. 

“We're in an uncertain environment, but things like the valuation of your goods, the classification of your goods, the location of your customers, your supply chains, are key. Understanding the basics will help you to be agile whenever the changes do come.”

Capitalise on opportunities

For Sinead Fitzmaurice, former CEO of TransferMate Global Payments, the economic volatility of the last 15 years – caused by the banking crisis, Brexit, COVID and the ongoing Russian war – has highlighted some principles that will serve organisations well in the current uncertain environment and help them to capitalise on opportunities.

You need to get back to basics, Fitzmaurice said. “While you're navigating through turmoil you require a strategic blend of foresight, agility and resilience. And as a business, you need to maintain your longer-term vision and strategy for the business. It comes back to those fundamental principles, for example, what are the operational efficiencies? Do you have concentration risk in a particular market? If the answer is yes, then you pivot, but you link it back to your strategic growth plan.”

Similarly, the evolution of your business model must be customer centric, Fitzmaurice added. “You need to know your market. You need to have the stakeholder communication, you need to have cost management, risk management and all of that. In a volatile situation, you need to lean into the core.”

Preparing for US tariffs

Alex Russell, ICAEW’s Head of Audit and Assurance Strategy, said that auditors and businesses should already be familiar with many of the issues raised by the uncertainty of US tariffs. “We're talking about margins and supply chains, and the auditor should already be getting under the bonnet of a business model to understand the entity and its environment.”

From an audit committee perspective, the focus must be on risk management, the risk register and mitigation procedures, Russell said. “Scenario analysis is fundamental here. Audit committees will want to take stock of internal controls over tariff management, supply chain management, pricing controls and, of course, compliance with trade regulations.” 

A question worth asking is whether the Chief Risk Officer or CFO should involve others. “With tariffs, you probably need to involve wider than finance – for example, legal teams, compliance functions, operations – to understand the effects on the ground. But if you're an SME or a smaller practice, do you need economists or external experts in taxation or indirect tax to support you?” 

Auditors: understand the risk

Understand the risk, the organisation’s ability to either absorb tariffs or their desire to pass them on to customers and their ability to change the suppliers of components or entire products. “Essentially, you're following material revenue and expenditure through the clients’ processes, systems and controls and understanding how it flows. If you take that mindset, you'll naturally build in where tariffs are hitting in the revenue and cost processes,” Russell said.

For auditors, understanding the entity in their environment starts at planning meetings. “Using your communication with the entity, how are you factoring that into your expectations around the audit before you even see any evidence? These things are rapidly changing, so keep reassessing that risk.”

With so much uncertainty around tariffs, going concern can be difficult, Russell warned. Do the budgets and cash flow stack up with what you know around the trade environment? Bear in mind that the fraud incentives created by tariffs might be elevated. 

“Is there remuneration linked to targets that have been affected by these tariffs?” Russel suggested getting management and the auditors to consider any new trade arrangements as part of these trade agreements in their consideration of laws and regulations that they have to comply with. 

This article is based on a recent ICAEW webinar, now available on demand: Ireland: Economic prospects, tariffs and the evolving world economic landscape

ICAEW has produced a brief guide to tariffs, including how to find information on those currently in force and the economic impacts these may have.