The UK’s decision to leave the European Union (EU), known as “Brexit”, will have implications for businesses, individuals, the economy and the tax system.

Negotiations for leaving and the UK’s future relationship with the EU are being overseen by the Department for Exiting the European Union. The latest version of the UK/EU Withdrawal Treaty was published in March 2018.

The key issues that make Brexit a very important and an immediate issue for businesses include:

  • ACCOUNTING – The potential change in reporting EU transactions means updating accounting systems. This can take time, and any business currently configuring a new accounting system will need to make sure it is capable of dealing with reporting and accounting changes.
  • INTERNATIONAL TRADE – The imposition of customs duties on movements of goods to and from the EU will affect agreed prices and costs of goods, so it is important for businesses which have contracts spanning key Brexit dates to consider the potential impact of these duties and who will bear the additional costs. (International Tax)
  • VAT & CASH FLOW – There is a specific impact on the VAT treatment of goods arriving in the UK from the EU after Brexit which has cashflow implications, and which need to be considered by affected businesses and factored into their working capital planning. (VAT advice)
  • WORKERS – The rights of EU nationals working in the UK and UK nationals working in the EU have yet to be fully agreed, and may impact on the workforce.
 
 
 

Our specialist Brexit advice Team

 
 

How can Bishop Fleming help you?

Whilst the final outcome of any deal between the UK and the EU is yet to be agreed, we are already helping our clients to plan ahead for the likely changes. We can help you understand the overall position of Brexit and how the UK/EU divorce is likely to evolve up to the end of the transitional/implementation period.

Timeline

  • 23 Jun 2016 – EU referendum decision
  • 29 Mar 2017 – Article 50 triggered
  • 30 Sep 2018 – UK/EU Brexit terms agreed
  • 29 Mar 2019 – Brexit Day – transition starts
  • 31 Dec 2020 – transition period ends
  • 01 Jan 2021 – Withdrawal Treaty begins

Business issues

  • Working capital – There is a specific cashflow impact of Brexit which will need to be recognised and planned for.
  • Supply chain impact – The effect of Brexit on supply chains needs to be considered.
  • Demands on management time – Managers will have strategic issues to consider and manage.

Indirect tax

  • The EU single market and customs union allows goods to move freely within the EU without needing to stop at any borders or produce any documentation.
  • Brexit will complicate this “frictionless trade”, and businesses need to start considering what the specific impact of this is likely to be for them.
  • On the basis that “nothing is agreed until everything is agreed” it is unlikely that the final position will be known until shortly before 29 March 2019, but businesses need to have at least outline plans in place for all the possible outcomes.

Definitions

  • EU membership – full membership of the single market and customs union, membership of the VAT territory (EU members only), full political involvement in policy.
  • Single market – free movement of goods, people, services and capital (includes non EU members eg Norway).
  • Customs Union – no duty on movements within the union, uniform external tariff (BBC video)
  • Free trade agreement – no customs duties (provided that origin criteria are met), agreement on shared standards etc.
  • WTO – World Trade Organisation – sets maximum duty rates in absence of specific agreements.

 

 

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