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What does a post-Brexit world look like for UK businesses?

Crowe UK has revealed the results from a study that looked into how UK businesses are coping in the face of uncertainty

It’s been a dramatic week, with Theresa May’s deal being voted down in parliament, followed in quick succession by her tenuous survival of a no confidence vote by 325 votes to 306.

In all of this uncertainty, it is far from surprising that UK businesses are struggling to figure out what they can do next.

As MHA MacIntyre Hudson did on Wednesday 16 January, Crowe UK also urged businesses to “take contingency steps for a ‘no deal’ Brexit.” They have stated that businesses need to be reviewing the potential impacts Brexit will have on their organisations, thus aiding in the process of mapping out their contingency plan going forward in this tumultuous time.

“There are steps business can be taking to help transition to whatever new trading arrangements the UK has with the EU and the rest of world,” said Robert Marchant, VAT partner at Crowe UK, yesterday. “In addition, the government has issues 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 until the UK formally leaves the European Union.”

Although the debate is still ongoing, Crowe UK has highlighted steps that can be taken now, regardless of outcome:

  • Making sure to incorporate EU companies and to assess the impact this will have on a business’s corporate group and infrastructure needs.
  • Businesses can review their responses to potential regulatory changes.
  • Open overseas bank accounts.
  • As well as opening overseas bank accounts, businesses can apply for Authorised Economic Operator (AEO) or ‘trusted trader’ status.
  • It is certainly worth businesses considering the use of customs warehouses in the future.
  • Furthermore, they could set up a duty deferment scheme.
  • One Crowe UK’s most important recommendations is to increase inventory held in key EU locations.
  • Businesses should review their workforce requirements in order to effectively support their adapted business plans.
  • They should support the EU nationals within their workforce. For example, making sure that these individuals are aware of how the company will support them through various changes that could be implemented.
  • Businesses need to review whether withholding taxes could be an issue post-Brexit and consider the scope to pre-paying.

As well as these helpful guidelines for UK businesses, Crowe UK has conducted research that looks into how economic and political uncertainty has been influencing businesses. The study consisted of 130 UK-based businesses “ranging from FTSE 100 to SMEs” during their webinar – Brexit—where are we now? – Crowe UK has reported.

They concluded that 80% of these businesses have taken “no active steps for Brexit, preferring a ‘wait and see’ approach.”

Laurence Field, corporate tax partner at Crowe UK, said: “While concerns about the final shape of Brexit dominate the thinking of many businesses, they should not lose sight of the fact 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.”

Statistics that Crowe UK’s study revealed included the fact that 22% of these businesses were worried about Brexit causing regulatory changes or it impacting on the availability of staff from the UK’s departure from the EU. 21% of businesses revealed that they were worried about time delays at the border for the movement of goods. Finally, 16% said that they were concerned about the general system and process changes that would be introduced for a “post-Brexit world”.

Dinesh Jangra, global mobility partner at Crowe UK, concluded: “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. Workforce planning and the changing compliance obligations resulting from new work arrangements must remain front of mind—commuters, business travellers, cross-border roles, and assignments as business prepares for the post-Brexit world.”

Source: Accountancy Age

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UK business anxious about economic outlook

Almost three quarters ( 74%) of FTSE 500 business leaders expect the country’s economy to decline over the next year – up from 66% the previous year, according to Ipsos Mori’s Captains of Industry survey.

This increasing pessimism is tied in with the uncertainty around Brexit, with 95% saying it’s the most important issue Britain currently faces.

Most are not confident in the government’s ability to negotiate a good deal for UK businesses with the EU ( 68%). Only one fifth ( 19%) of business leaders agree they are confident – down from 28% last year.

More than half ( 55%) of business leaders view the decision to leave the EU as a significant risk to their company and three quarters ( 73%) disagree with the statement that the decision to leave the EU will bring significant new opportunities for their company.

They think Brexit to date is worse than they predicted 12 months ago with 67% feeling their company’s business situation is worse than it would have been if the UK had voted to stay in the EU (compared with 56% last year).

However, 92% are confident their company can adapt to the consequences of leaving the EU and half of business leaders ( 50%) expect the business for their own company to improve over the next 12 months, with one fifth ( 19%) expecting it to get worse.

Looking forward, three quarters ( 78%) of business leaders think that overall, the UK leaving the EU with no deal would have a negative impact on their business.

Business leaders’ confidence in economic policy remains low.  A third ( 38%) disagree with the statement that in the long term, this government’s policies will improve the state of the British economy.

But they remain in support of the Conservative government with 94% of respondents disagreeing that Labour’s policies would improve the state of the British economy.

Ben Page, CEO of Ipsos Mori, said: “Britain’s largest businesses feel Brexit is having a more profound impact on British business than our business leaders thought it would a year ago – 67% of Captains think that their company is worse off.

“As with the public, business is losing confidence in the government’s ability to manage Brexit, but have no confidence in Labour doing any better. More positively, most think they will adapt, but nearly all think leaving the EU with No Deal will be bad for their business.”

Source: Research Live