When the Brexit dust settles, will your business be tax-ready?
19/12/2020
It’s happening. Whether we like it or not, whether we are for it or against it, the time is drawing close for us to say a final farewell to EU membership. It’s fair to say the past few years have had their share of headaches and I know folk who’ve had breakups that were easier, but in this case, the injured parties can’t even agree to disagree!
The last few years have been emotionally and financially draining, beset with stop-start negotiations and fraught with uncertainty. The psychology of the split cannot be underestimated, and whether you approve of it or not - we’ve all been through the wringer. Lots of people are feeling powerless, at a loss as to what to do to get a handle on today and tomorrow let alone next week, next month or next year. It can feel like there’s a mountain to climb. Yet that’s not how I’m choosing to see it. I’m looking at this period of living history as a time when we can seek and find the support we need. Being there for each other, and knowing that help is available, will be vital for our businesses’ futures.
When the dust settles on 40 years of UK/EU collaboration, where will that leave us? The government’s advice is awash with buzz words: strategise, monitor, stress-test, contingency. We’re being asked to make decisions that could have positive or negative outcomes down the line. We’re told to keep abreast of things but how? Whether we export or have our goals firmly set in one country, the ramifications and knock-ons will touch everyone.
How can you hold on to what you’ve worked hard for, and continue to develop and grow and make healthy profits? How do you maintain and enhance your reputation in times of great uncertainty? I believe attention will focus on your relationships with the key players in your business world – your bank, clients, employees, and customers. The need to be flexible, ready to move with the current, will come down to how you prepare and how you stay focused. How you manage this when the goalposts keep moving, and you have a business to run lies in knowing you have someone who has your best interests under control, someone who is working for you and with you.
Here at Kerr Accountancy, we’ve been busy during the transition period gearing up for the change that should come into effect in January 2021. It’s all about staying ahead of the curve – no mean feat given that the curve has a mind of its own and sometimes appears directionless! The guidelines and pathways aren’t always clear or easily signposted, and there’s been lots of chopping and changing, but we’re primed for it and riding that curve. What we can surmise is that if we remain closely aligned with EU regulations, the changes will be few but if there are significant divergences, then we’ll need to adapt to meet and comply with new regulations. Tax regulation changes are expected when the UK exits from the EU on December 31st, including the freedom to set some domestic taxes (e.g. VAT) which are currently bound by European constraints. The government will be free to implement tax-based incentives to target increased investment and growth in the UK economy. There will also very likely be implications for public procurement processes, so in all, it’s fair to assume that additional business costs are looming. If you have a clued-up accountant on your team, then any changes and new measures can be dealt with on your behalf without you worrying unnecessarily.
We’ve been looking into anticipating and adapting to changing scenarios and their associated costs, doing the stress testing for our clients to ensure their finances are in good shape. It makes good business sense to carry out cashflow projections and stress test your finances to see if you require, for example, a more flexible banking arrangement.
Being ready means not only will your business have a better chance to survive but also to thrive. We’re advised that time is running out, that we can’t delay or be caught sleeping on the job. This panic mentality doesn’t help when we’re also told that we may need to wait until more is known about the outcome of the EU/UK negotiations. What if a deal isn’t reached by December 31st, 2020? That’s one Hogmanay party we’ll be avoiding, regardless of Covid regulations, but Kerr Accountancy will be ready to help you and your business every stop-start step of the way.
If you need advice on what Brexit may mean for your business accounts & financial planning, feel free to get in touch.
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