Brexit

Tuesday evening saw the House of Commons vote against the government’s Brexit plan with a majority of 230.

On Thursday, 17 January, HMRC released the following statement:

‘The UK will be leaving the EU on 29 March 2019. Leaving the EU with a deal remains the government’s top priority, however the government and businesses should continue to plan for every possible outcome including no deal.

‘In December, HMRC wrote to VAT-registered businesses that trade only with the EU advising them to take three actions to prepare for a no deal EU exit, including registering for a UK Economic Operator Registration and Identification (EORI) number. You can read the full letter here.

‘Businesses that only trade with the EU will need an EORI number:

• to continue to import or export goods with the EU after 29 March 2019, if the UK leaves the EU without a deal; and
• before they can apply for authorisations that will make customs processes easier.

‘If you are a UK business that trades with the EU and do not already have an EORI number then you should register for an EORI number at GOV.UK now. It only takes ten minutes to apply. These businesses should also decide if they want to hire an agent to make import and/or export declarations for them or make the declarations themselves.

‘Businesses can find further guidance on customs declarations at Declaring your goods at customs if the UK leaves the EU with no deal. We have also published a new ‘Prepare your business for the UK leaving the EU’ tool on GOV.UK to help businesses with their EU exit preparations that provides further support and guidance at Prepare your business for the UK leaving the EU.

‘We will continue to support businesses in their preparations for leaving the EU, including registering for an EORI number, as the 29 March 2019 approaches.

Businesses are being urged to review the potential impact on their organisations and take contingency steps.

Tax expert Richard Asquith, VP global indirect tax at Avalara, said: ‘More than 145,000 companies are now headed for major tax liabilities on a hard Brexit. They will have to pay duties charges, on average ranging from 4% to 40%, and the government has failed to launch its promised no-deal guidance VAT deferment scheme.

‘In addition, come March 29, many will be responsible for a whole host of new obligations including new customs declarations and uncertainty if their products remain properly licensed to continue selling in the EU. Companies need to start getting their supply chains and contractual obligations in order now and consider the many HMRC schemes that mitigate the worst effects of a hard exit from the Customs Union.

‘The pressure will now all be on HMRC, which is already struggling with the introduction of its new customs declarations database, CDS. It may now have to delay its Making Tax Digital for VAT, which is launching on 1 April for more than one million VAT registered businesses.’

According to national audit, tax, advisory and risk firm, Crowe UK, the defeat of the deal in parliament could increase the chance of a ‘no deal’ Brexit, which raises the urgency for businesses to prepare thoroughly.

While the details of the UK’s withdrawal are still being debated, Crowe has advised UK businesses to take a number of immediate practical actions, regardless of the outcome of any future talks:

• Incorporate EU company and assess impact on corporate group and infrastructure needs.
• Review their response to potential regulatory changes.
• Open overseas bank accounts.
• Apply for authorised economic operator (AEO)/’trusted trader’ status.
• Consider use of customs warehouses.
• Set up a duty deferment scheme.
• Increase inventory held in key EU locations.
• Review the workforce requirements to support their business plan.
• Consider support to EU nationals in their workforce.
• Review whether withholding taxes could be an issue post Brexit and consider scope to pre-pay.

Despite the current uncertainty, research from Crowe among 130 UK-based businesses, ranging from FTSE 100 to small and medium enterprises (SMEs), revealed that the vast majority (80%) have taken no active steps to prepare for Brexit, preferring a ‘wait and see’ approach.

The research also revealed that regulatory change and the availability of staff following the UK’s departure were the biggest worries for businesses (both at 22%), while time delays at the border for the movement of goods (21%) and general systems and process changes (16%) were also prominent.

Robert Marchant, VAT partner at Crowe UK, said: ‘There are steps businesses can be taking to help transition to whatever new trading arrangements the UK has with the EU and rest of the world. In addition, the government has issued guidance to help with “no deal” planning, so organisations can review the impact of this on their arrangements immediately. The time to act is fast approaching as there are now only around 70 days to go until the UK formally leaves the European Union.'

Laurence Field, corporate tax partner said: ‘While concerns about the final shape of Brexit dominate the thinking of many businesses, they should not lose sight that other tax reforms driven from the US, UK, EU and OECD could have a significant impact on international business. With many countries now doing their own thing with limited regard for international agreements, Brexit is only one element of the challenges facing businesses looking to operate across borders.’

Dinesh Jangra, global mobility partner said: ‘From a people and employer perspective, immigration remains the big issue. Government white papers and policy statements are making things a little clearer in this space but there remains a void of practical detail. Front of mind must remain workforce planning and the changing compliance obligations resulting from new work arrangements – commuters, business travellers, cross-border roles and assignments as business prepares for the post Brexit world.’

Maggie McGhee, executive director – governance at ACCA (Association of Chartered Certified Accountants), said: ‘Tuesday’s vote on the withdrawal agreement regrettably means government did not reach an agreement on the best course of action supporting business, despite unprecedented scrutiny of the government throughout the Brexit negotiation process.

‘This has resulted in a continued impasse and means further uncertainty and disruption for businesses globally on a range of key matters. Including movement of goods and services, recognition of UK regulatory frameworks and qualifications, and most importantly access to talent.

‘ACCA will continue to monitor developments and what they mean for the profession globally.’

Categories: News , Europe