With the possible Brexit date of March 29, 2019, drawing closer, the lack of certainty and potential implications remain for many businesses. Although the final outcomes are unknown, the possible options and available models are, therefore businesses can undertake possible testing and planning now in preparation.
In September, accountancy firm RSM joined forces with Mersey Maritime to host an event at its 20 Chapel Street office, in the heart of Liverpool’s commercial district, to discuss the variety of potential indirect tax impacts of Brexit, including cash flow constraints, additional costs and logistical implications.
Andy Gott, associate director and indirect tax specialist at RSM, said: “Currently there is a lack of information and certainty on what businesses can expect once Britain leaves the EU and there is a particular concern about what a no-deal Brexit will mean for businesses.
“While we don’t have all the answers – at this point, no one does – businesses can still explore the impacts of likely models and the possible implications on their supply chains by scenario planning the possible outcomes.”
The key message from the session was ‘preparation’. While some larger businesses are already planning for the different outcomes of negotiations, many mid-sized and owner-managed businesses may struggle due to resource constraints and have adopted a ‘wait and see’ attitude, which could be a risky strategy.
Possible areas that businesses could be addressing include
- Reviewing supply chains – how could they be affected under a ‘no deal’ scenario? Even if your business is buying from a UK supplier, are they in turn importing components or raw materials from the EU?
- Considering the impacts of delays for goods moving through ports and Customs. The possible delays could arise from the additional checks and declarations required post-Brexit but also from the possible implementation issues of HMRC’s new import declaration system.
- Stress testing margins for possible additional customs duties. Businesses should begin considering introducing Brexit clauses into contracts.
- What are the cash flow implications on the business of additional import VAT?
- Are there any mitigation opportunities that could benefit business post-Brexit, for example customs warehousing?
RSM is a leading audit, tax and consulting firm to the middle market with over 3,800 partners and staff operating from 35 locations throughout the UK. For the year ending 31 March 2017, RSM generated revenues of £319m.
RSM UK is a member firm of RSM International – the sixth largest network of audit, tax and consulting firms globally. The network spans more than 120 countries, 800 offices and more than 43,000 people, with a fee income of $(US)5.1bn.