Brexit: Issues affecting business
This guide is designed to advise those in Business of the significant issues resulting from the ongoing Brexit negotiations. With the UK set to leave the bloc on 31st December 2020, there are still many issues outstanding. We look to expand on some of these here.
Effective cash management will be key to navigating potential uncertainty resulting from the Brexit process. Balance sheet management will have to take centre stage, with Finance Departments ensuring robust and holistic scenario planning is undertaken to deal with a range of political possibilities. As the ongoing Covid-19 crisis has shown, working capital is key to dealing with uncertainty and ensuring day-to-day operations can continue.
Businesses should clarify credit terms and existing credit lines with their lenders, and ensure provisions are made if they are needed. Payment terms with debtors and creditors should also be clarified, with an emphasis on flexibility if adverse scenarios occur.
The ICAEW has produced the following resources to help:
Quite clearly, the export process will undergo changes, regardless of the deal that is negotiated. Businesses should keep a close eye on developing political discussions to determine the preparations that need to be made. Of course, the situation is still evolving, and ICAEW will ensure updates are made when needed.
Resources to bookmark include:
Businesses supply chains have already undergone a thorough examination during the Covid-19 pandemic as global supply routes froze to a halt, with ongoing disruption only set to continue. The dual threat of Brexit will again place businesses under severe strain.
Businesses will need to identify their EU trading partners and make early contact to work together with these partners to scenario plan future supply needs under a range of possible deal terms. Customers should be made aware in advance of possible Brexit related disruption to their orders, to alleviate possible negative consequences. The industry should work together to trade ideas and plans to ensure as little disruption as possible is caused.
There is lots of guidance already published, and being updated often:
Customs processes starting from the 1st January 2021 are currently one of the most uncertain parts of the ongoing negotiations, despite being one of the most important for business.
Because of the importance of this area, businesses should check the following pages for updates as they occur:
There are a myriad of potential complex legal issues resulting from Brexit negotiations. With such a large range of potential changes to occur, with each having a potentially huge impact on business operations, business needs to begin getting prepared urgently.
Contracts may need to be re-registered and re-signed, if the relevant terms and authority are no longer valid in a post-Brexit world, with force majeure being a particularly key concern. Commercial relationships may change, which will be needed to be worked through together. Likewise, businesses may have a change of regulatory body, with new rules to be followed and administration to be filed. Meeting these terms will be a complex and large operation, which will be onerous and time-consuming.
International trade paperwork (EU and non-EU) may change, and businesses will need to be aware of their new duties to ensure operations can continue smoothly.
It is imperative businesses maintain contact with their legal representatives to keep on top of an ever-developing situation. Key resources include:
The result of Brexit negotiations may impact on existing VAT rules in the UK. The UK Government have already indicated that a ‘no-deal’ outcome will have a significant impact on the rules, with a number of changes occurring. This will impact on businesses importing and exporting goods into and out of the EU, as well as the supply of services.
The EU VAT refund system and registration number validation service will also be impacted. Together, these potential changes will result in a huge and complex operation to ensure compliance with the new rules.
There are many key resources which detail the potential changes:
UK Internal Markets
An often-forgotten part of Brexit preparations is the UK internal market. The UK Government are keen to ensure businesses are aware of their options to ensure goods and services continue to flow in the UK after Brexit.
The Governments White Paper is essential reading:
The Brexit situation is continuously developing and evolving as negotiations continue. However, this must not detract from the urgent need for businesses to scenario plan and develop contingency actions to counter the possible repercussions coming from the UK exit from the EU on 1st January 2021.
The ICAEW will continue to develop resources and remain committed to supporting business through this process.