Taxation

Brexit: Your Client Needs You

By Steve McCrindle, Haines Watts

With Brexit set for 29 March 2019 and with no approved agreement yet between the EU and the UK on post-Brexit VAT, Customs and Border conditions, what have your affected clients done to prepare?

Put another way, Brexit is less than five months away. Are your affected clients prepared?

Regardless of if there is a Brexit deal or not, there will be change. No-one yet knows what the changes will be, but change is certain.

Have you discussed with your affected clients the potential impact this change could have for their businesses? Have you discussed with them a Plan B, their contingency for a no deal Brexit?

Is doing nothing an option for a client if the impact of Brexit means that they lose their business or part of it?

Is doing nothing an option for you their trusted adviser, if the impact of Brexit means that you no longer have the client and/or you are threatened with a lawsuit?

Brexit impacts any business anywhere in the world that trades with the UK, through the UK to the EU, or through the EU to the UK.

Here are five key areas your clients should think about now to ensure they protect their business.

1. Review supply chain

Check the pre and post-Brexit VAT ‘status’ of all the parties in their supply chain as this could affect their business. Similarly, it would be sensible to ask their suppliers to ensure that they in turn check the VAT status of their own supply chain, so that they can limit any potential ‘domino’ effect on their business.

An importer of goods into the UK from the EU may want to establish if the current supply chain will still be fit for purpose, cost effective and not crippled by onerous customs requirements and border controls.

The same applies if they are an exporter to the EU.

Ergo, are the supply contracts they have with customers and suppliers onerous in the post- Brexit business environment, and therefore require amendment or replacement?

2. Evaluate EU operations

Have they considered whether they will continue to keep offces, manufacturing plants, warehousing space, in EU countries, or whether they should move at least some of their UK activities into the EU and vice versa?

If they source products within the EU only to assemble goods in the UK and export back to Europe, what would the best option be?

Time is running out if they need to give notice on or source new facilities – research their options now and ensure they have the funds, resources and capability to respond.

3. Review insurance

If, in the worst-case scenario, their goods are held at border crossings or ports, does their current insurance policy address losses incurred because of Brexit? Insurers are likely to be factoring claims into their premiums. The sooner they review their current cover and make the necessary adjustments the better.

4. Assess IT systems

UK VAT registered businesses are already faced with having to implement systems/processes for MTD (Making Tax Digital), which goes live for UK VAT purposes on 1 April 2019.

It may be the case that HMRC will have to introduce new digital systems to collect duties; a new system, CDS, is being prepared by HMRC to replace the CHIEF system presently.

Is the client in a position to respond to this requirement quickly? Do they understand how their existing systems are set up and what the potential implications could be? Do they have the right staff in place in both their IT and finance teams to manage any changes to VAT processing and payments?

5. Model cash flow scenarios

If their imports or exports are held up at border crossings or ports, how long will they be able to fulfil orders? If they are required to make VAT and Customs payments upfront at borders, do they have suffcient funds to do so, and for how long? This could also impact on any financing they rely upon, for example, do they know what their lender’s position is and how flexible they will be if the client runs into cash flow issues? Best to ask now rather than wait and see.

Conclusion

Brexit means change and your client will likely need your proactive advice and assistance. The GGI Indirect Taxes Practice Group is in the process of setting up a Brexit Club of multi-national, multi-disciplinary teams, to assist you and your clients. It needs your input on your clients’ needs before it can swing into action.

Please get in touch so that we can discuss your own and your client needs!


Steve McCrindle

Steve McCrindle

Haines Watts, With more than 60 offices throughout the UK
T: +44 1235 835900
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GGI Indirect Taxes Practice Group
T: +44 7584 901473

Steve McCrindle is a VAT Partner at Haines Watts, a leading provider of business advice and accounting services to ownermanagers operating in the UK and abroad. It has more than 60 offices throughout the UK. He is also Global Chairperson of the GGI Indirect Taxes Practice Group.

Haines Watts assists clients to navigate complex issues around tax planning and structuring, growth and expansion plans, with securing funding, succession management and harnessing opportunities. Our commercial focus and practical approach ensures we help our clients build profitable businesses and realise their ambitions.
 


Published: November 2018 l Photo: Artem Chekharin - stock.adobe.com

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