Preparing for Brexit

Brexit is a bit like the proverbial British summer; we know it’s coming but we have no idea quite what it will look like. For SME’s, what is clear from all this uncertainty is that there will be opportunities and threats:

Exchange Rate Fluctuations: Sterling has devalued 15% since the EU referendum, so Brexit is likely to influence this further:

  • Understand and minimise your FX exposure on your non-sterling touchpoints (eg: selling prices, supply chain costs, orders and cash held in foreign currencies),
  • Material changes in exchange rate could fundamentally affect the countries you prefer to buy and sell from and to,
  • Businesses who import from the EU may wish to delay passing on selling price increases to customers/clients, to attract new business away from competitors who have passed on price increases immediately,
  • Lock into current GBP prices, where possible (eg buy 3 year Microsoft licences).

New Tariff Regime: Our current ‘single market’ trade agreement (ie, between the EU and the rest of the world) is likely to change:

  • Material changes in tariffs (WTO tariffs average 2.3%, excluding Food/Agriculture) could fundamentally affect the countries you prefer to buy and sell from and to.
  • It may now be easier for you to sell to key European markets through setting up an overseas subsidiary.

Interest Rates: It is feared that further quantitative easing following Brexit, to stimulate activity, will almost certainly nudge inflation, and hence interest rates, upwards:

  • Businesses who will soon need to borrow should consider bringing forward funding applications so as to lock into the current rock bottom UK fixed interest rates.

Regulation: All EU laws will initially be converted into UK law, but your business should prepare for future changes:

  • Projects and activities that take advantage of current generous (ie, state aid) tax rules should be brought forward (eg R&D Relief, EIS equity funding).
  • Disliked EU rules, such as the basis of calculating holiday pay, could be repealed.

Shock: UK consumers and businesses are very sensitive to uncertainty and confidence:

  • Build up a cash resources buffer to protect against a potential short term stagnant period around the time of Brexit,
  • Be prepared for trade activity to bounce back afterwards,
  • Could this be “a good day to bury bad news”, eg, general price increases?

Doomsday Scenario: Sensible precautions should be taken in case Theresa May’s Brexit negotiations turn out as unfavourably as David Cameron’s EU reform pre-referendum negotiations:

  • UK bank deposits are guaranteed up to a balance of £85k. Those holding more cash than this with any single bank may wish to divest this risk by opening deposits with other banks.


 
Latest Blogs in Preparing for Brexit
 
Ian Piper
19th November 2018 Draft Brexit Agreement: What’s all the fuss about?

So now that we can finally see what Brexit might mean in reality, with the publication of the Draft Brexit Agreement, everyone is still unhappy. After much talk about what we wanted, which was leaving the EU club, whilst cherry-picking retention of access to the Single Market and a borderless border in Ireland, it has…

Read More »

Jaimie King
13th November 2018 Corporation tax rates set to fall

Following the Autumn Budget on 29th October 2018, it was confirmed that Corporation Tax rates will fall to 17% from 1st April 2020. Currently, the Corporation Tax rate is 19% and this will remain until the 17% rate comes into force. Presumably the reason for introducing lower rates is to make the UK more competitive,…

Read More »

Keith Day
8th November 2018 Further contingency planning guidance on a ‘No deal Brexit’

HMRC has issued a Partnership Pack to help businesses carry out contingency planning and to help their customers, members and clients to: think about how they will need to adapt their business to comply with new systems, processes and controls assess the impact of the increased demand for customs declarations on their business consider whether…

Read More »

Victoria Stokes
15th October 2018 Preserve your wealth

Discover how to manage your wealth effectively at our annual event led by our wealth management and tax experts. There will be three presentations followed by a light lunch – a great networking opportunity. Tax planning tips & traps Barbara Nicholas, Tax Partner at Whiting & Partners  Passing on Wealth – How hard can it…

Read More »

Ian Piper
23rd May 2018 EMI Share Options: EU waives opportunity to ‘be difficult’.

Tech companies that have a business plan of developing a new product, with the aim of an eventual trade sale or IPO exit, will be very familiar with EMI share options. These options give generous personal tax breaks, to help recruit, retain and reward middle management and key workers. Under generic EU principles, such tax…

Read More »

Paul Tatum
27th March 2018 VAT Update – Out with the old and in with the new

  The current system for processing customs declarations for imports and exports with non-EU countries is changing. The current CHIEF system is to be replaced with the new CDS (Customs Declaration Service) to be phased in from August 2018 into early 2019.   The old system is nearly 25 years old and has become inflexible…

Read More »

Ian Piper
26th September 2017 Brexit: Practical SME preparations.

  As we approach the end of the first quarter in the run-up to Brexit D-day, we are now beginning to see what practical steps SME businesses are taking in preparation: Businesses with a significant production source or market presence within the rest of the EU are strengthening their presence there. Creating a subsidiary based…

Read More »

Jaimie King
20th June 2017 Brexit: The end of UK audits?

Audit thresholds are linked to the small company limits, which are currently set by the EU. The UK can choose to impose a lower threshold than the small company limits, but not a higher one. As a result of Brexit, power will return to the UK, and as a result the cap on audit thresholds…

Read More »

Ian Piper
16th June 2017 Brexit

Post Brexit: What cutting of red tape might SME’s expect? After almost a full year of foreplay, formal Brexit negotiations with the EU will eventually commence next week. Looking ahead one step further, what can SME’s expect post Brexit? And will the UK Government use this opportunity to further advance their stated policy of reducing…

Read More »

Keith Day
24th April 2017 Brexit: Time for European businesses who export to the UK to start a UK subsidiary?

Last year the UK imported £350 billion of goods and services from businesses in fellow EU member states. Although a lot of talk in the run-up to Brexit is currently about what UK business should do to protect their interests post-Brexit, these European businesses should, similarly, be hedging their exposure to the expected changes. Germany,…

Read More »