Getting ready for Brexit

When it comes to Brexit, business owners are split into two camps.

One group believes that the impact of Brexit is minimal to their businesses, which range from providing consultancy to logistic services, to multi-disciplinary companies spread across the UK. Their size ranges from two people to teams of several hundred.

The other group believes the opposite. To them, the impact of Brexit is enormous, potentially disastrous even though they may not necessarily rely on any EU supply chain. They can also range from individuals providing consultancy services to business owners who offer local transport services and other services across the UK.

The common attribute both groups face is uncertainty and under this circumstance, the best thing to do is to prepare as best as you can while continuing to deliver an excellent service to your clients. As preparation is key, we aim to discuss a few points in this post which you can do now to prepare your business, either way.

EU workers

Many EU workers are keen to remain in the UK and we have seen plenty of business owners actively encourage them to do so. The first thing EU workers need to do is to apply for “settled status” (aka Indefinite Leave to Remain) with the Home Office if they have been here for five years or more. Alternatively, they can apply for “pre-settled” status (aka temporary residence) if they have been here less than five years but longer than six months.

A weaker pound

The pound has dropped in value following the Brexit referendum, currently sitting at around 1.15 Euros at the time of writing. A weaker pound has challenges and advantages depending on how you look at it. One clear advantage of a weak currency is that it can help to boost the UK’s export, as the goods will be less expensive to foreign buyers.

A weaker pound will also attract foreign investments, as their money will buy more. The UK’s economy is still the fifth largest in the world (if we don’t count California as a ‘country’) and there are overseas companies looking to get a foothold in this market, giving businesses in the UK a chance to forge some profitable partnerships with foreign investors.

Having said that, a weaker pound will have its disadvantages – imported goods will be more expensive for consumers and it will be harder for the Government to pay back debt issued to foreign investors.

If you haven’t done so, it’s wise to start creating a business plan to see how a weak pound could affect your business.

Operations and supply chain

At the time of writing, we don’t know what the tax implications will be when it comes to importing goods from EU countries to the UK, but if you haven’t taken a precautionary initiative to source for non-EU suppliers, do it now. Also, don’t forget to factor the impact of costs and the potential delay in the movement of goods on your operations.

Consider a new sales and marketing plan

Regardless of Brexit, it pays to revise your sales and marketing plan and make sure what you’re selling still meets the needs of your clients, local and overseas. If you deal with goods, make eCommerce one of your key sales strategies because it is an area that will continue to grow and allow you to reach customers all over the world.

Brexit and financial planning

Cash-flow planning is vital in any situation and can help your decision- making process. The reason is simple; it makes you go through the best and the worst scenarios and allows you to see your options without bias or prejudice.

VAT will continue after Brexit, but the rates may move should the Government wish to help the economy a little. At present, UK businesses selling to EU clients can claim VAT refund online, this may change.

How Tax Agility can help contractors and small businesses in London

At Tax Agility, we have a team of chartered accountants working with businesses across London. We excel at handling accounts & bookkeeping, payroll, VAT, management consultancy and giving solid, no-nonsense tax advice.

We also help contractors and small businesses to grow, providing realistic business guidance and advice. If you’re interested to know how a solid business plan with realistic financial KPIs can benefit your business, give us a call on 020 8108 0090 and book a free, no-obligation meeting.

This post is intended to provide information of general interest about current business/ accounting issues. It should not replace professional advice tailored to your specific circumstances. 

Do You Have A Brexit Plan? You Should.

And so it begins. Article 50 was triggered by the Prime Minister and the two years of negotiations with the EU have begun, albeit unceremoniously with early jabs from either side on where their respective red lines are and even a little early sabre rattling concerning historical disputes such as the future of Gibraltar.

The PM has even said that “No deal is better than a bad deal”. We wonder how our clients feel about that? And of course that leads us to the question about what plans our clients may start putting in place? How they have faired since the decision to leave was originally taken?

Little impact on small businesses so far

As far as we can tell and also from the results of numerous surveys taken last year, including one from Company Check, over 50% of small businesses have said that there’s been no impact on them, 30% had reported a negative impact largely due to the uncertainty Brexit has caused, and 15% said they have experienced a positive effect.

Another report from Opus Energy claims that many SMEs are unfettered by the Brexit result, with 29% of the 500 SMEs it surveyed reporting they were more confident about their business outlook than they were before the decision to leave was made. Only 20% felt less confident. These results do reflect the great British spirit we often talk about: “From adversity comes opportunity”.

Whether you are a Brexiteer or a Remainer, the die is cast and it’s time to get on with business. We believe that Brexit should be viewed as a form of ‘Creative Disruption’, seen as not just a significant challenge for many companies, but also a sizeable opportunity too. The UK is still the world’s fifth or sixth biggest economy, depending on how you look at the value of the pound. We are a strong nation with a limitless desire to succeed and it would be foolish to believe that the UK need be entirely dependent on EU trade agreements. Can we expect pain? No doubt. But often, businesses that are very comfortable in what they are doing - “making hay while the sun shines”, as the saying goes, can become complacent and end up an industry laggard rather than a leader.

Start Planning For Change

So, for many businesses, maybe this is a wake-up call. Start planning for change, because ready or not, it is coming.

How do you plan? The first potential impact is staff. A lot of companies have become used to employing people from other countries in the EU. We have taken for granted the Italian Chefs, the Romanian fruit and veg pickers and the Polish builders. But, in recent months over 50,000 EU nationals have left the UK. Is this the beginning of a ground swell of people voting with their feet? It’s too early to say, especially there are many EU nationals in non-seasonal or cyclic work have invested personally in this country, much in the same was as those Brits who now live and work in other European countries.

Have you spoken to your EU staff? Have some open discussions and see how they feel. Many may be permanent resident holders and not so inclined to move.

What plans can you put in place to offset the potential loss of staff with training for local employees instead? Consider new apprentice schemes for instance.

Are you overly reliant on the EU for raw materials? Are there alternatives you could explore?

Manufacturers in the UK are some of the businesses that are most optimistic, with over 73% reporting as such in a report by Albion Ventures. IT and Telecoms are next at 65%, with retail SME at 53%.  A weaker pound has it’s upsides for these companies, as it makes our products cheap in comparison, as long as labour and raw materials are sourced competitively.

Seize the day while you still can and get planning

So, our advice is to look very closely at your business operations and it potential vulnerabilities. Conduct what the banking world calls ‘stress tests’, by analysing ‘what if’ scenarios and exploring the potential for new, non-EU, partnerships.

You have plenty of time, two years in fact.

Carpe Diem!

How UK Contractors are Affected by Brexit

53432411 - brexit great britain eu exit It’s been a couple of months since the Brexit vote, and while the dust has slowly been able to settle on what was an unquestionably surprising result, we’ve had the time to look into the ways in which British contractors are likely to be affected from our leaving the European Union (EU).

It’s important to note that though the Brexit vote has resulted in some immediate changes to the British economy, including but not limited to the weakening of the pound, new Prime Minister Theresa May has made it clear that the earliest that Britain would give its ‘notice’ to leave the EU, by triggering Article 50, won’t be until the first few months of 2017, after which there will be an up-to two year negotiation period before any changes begin to take place.

Homegrown Legislation is Greater Pain

One of the driving forces of the leave campaign was their assertion that, outside of the European Union, Britain would be able to drop all EU laws as we pleased. This includes the Agency Workers Regulations (AWR); a piece of EU legislation that has proven to be contentious among British contractors.

But there’s a twofold problem here. Firstly, if the UK is going to retain access to the single market then we’ll have to continue to abide by certain EU laws. Secondly, many contractors agree that certain pieces of homegrown legislation, such as IR35, are a much greater pain for contractors to negotiate than anything the EU has thrown their way.

Trade and Immigration Changes

The changes to trade and immigration, especially with regard to working in EU countries (more on that below), is an area in which it’s difficult to predict what is likely to happen.

There’s a good chance that the UK will stay a part of the single market, at least “in some form,” as was former Prime Minister David Cameron’s wording prior to the vote. Depending on how much a part of the single market we remain will make a big difference to the changes British contractors can expect to see post-Brexit.

Contracting in European Union to Require More Hurdles

Contracting in Europe, that is, travelling to Europe to fulfil contracts, or simply selling our services to European customers from home, is an already complicated affair. Britain’s exit from the EU is only going to create more hurdles for contractors looking to work in and with EU countries.

Depending on what trade deals and free-movement of people deals are put in place (with visa-waver schemes potentially having to be set up), these hurdles may be small or they may be great. Only time will tell, but it’s highly unlikely that UK contractors will be shut out of the EU altogether.

Experienced Contractor Accountants

To speak with a professional accountant to discuss how Brexit may affect your contracting business, both at home and abroad, contact us today on 020 8780 2349 or get in touch with us via our contact page to arrange a complimentary, no obligation meeting.

How Would Brexit Affect Your SME

If you’re a small or medium-sized business (SME) owner who currently exports to Europe, whether business-to-business or business-to-consumer, the upcoming European Union (EU) referendum on 23 June may hold a significant weight on your business’s future earnings.

Because the EU operates as a single market with no tariffs imposed on imports and exports between member nations, small businesses exporting from the UK to other EU member states have had it pretty good up until this point; but that could all change should the ‘leave’ camp gain more than 50 percent of the vote at the end of June.

If you currently export to Europe, here are five things to think about regardless of the potential Brexit:

1. There’s a ‘Wealth’ of Potential

It’s no exaggeration to say that some of the wealthiest counties in the world reside within Europe (and, for the most part, are EU member states). High wealth means high consumer spending, and if you’re not tapping into this spending you could be leaving money on what is currently a very reachable table.

2. Does Exporting to Europe Significantly Add to Your Bottom Line?

With that said, you have to ask yourself if exporting to Europe will significantly add to your bottom line, especially if you have high marketing and advertising costs (see below). You can argue that making a smaller profit in Europe is worth it for a short period to gain brand recognition, but if this doesn’t soon pick up you may want to rethink your decision to sell abroad.

3. You’re Geographically Close

Regardless of whether or not Britain is still in the EU after 23 June, we’re still very close to the continent geographically, which means Europe will continue to be a cheap (compared to the rest of the world) location to export to.

4. You Have to Keep Foreign Taxes in Mind

Exporting to Europe means you not only have to pay taxes in the UK but, depending on what you’re selling and how much, there’s a good chance you also have to pay tax in the countries you’re exporting to. These will change should the ‘leave’ camp succeed, but this is a complicated topic nonetheless.

5. Exporting to Europe Helps to Solidify Britain's Place in the World

Not that this should rest on your shoulders alone, but choosing to export to Europe helps to solidify Britain's place (and importance) in the greater world. It also, depending on what you’re exporting, allows the rest of the world to benefit from the exceptional talent and creativity within Britain’s shores.

Experienced EU Tax Accountants

To speak with a professional accountant to discuss the positives and negatives of exporting to Europe, both now and in the future, contact us today on 020 8780 2349 or get in touch with us via our contact page to arrange a complimentary, no obligation meeting.

Brexit: Opinions on the Impact on SMEs

There’s no doubt that you’ve read hundreds of articles and opinion pieces on Brexit and the European Union (EU) referendum over the last few months. For this reason, we’re going to keep this brief.

This is our roundup of varying (and often wildly different) opinions on the potential impact of Brexit on small and medium-sized businesses (SMEs) across the country. If, like 42 percent of small business owners surveyed earlier in the year, you are still on the fence over whether to vote for a British exit from the EU or not, this neutral roundup may help to sway you one way or another.

Remain: Free Movement of Individuals

Though this is a topic of debate that has primarily come up regarding us Brits’ ability to move around Europe (or rather, let’s be honest, the Mediterranean coast) on our holidays with the same ease we enjoy now, research published by the Federation of Small Businesses (FSB) suggested that 70 percent of SME owners said the continued free movement of individuals, and thus, labour, across Europe would influence how they vote come 23 June.

The key here is talent, and it’s a contentious issue among voters. From a small business’s point of view it makes sense to wish to hire the most qualified person for the job, as long as they’re able to legally work in the UK. Voters, on the other hand, argue that British citizens should have precedent in the job market over non-British members of the EU.

Leave: Flexibility and Adaptability

Back in March, and in response to a letter published the week before by the heads of 36 FTSE 100 companies urging Britons to remain in the EU, 200 small business owners signed an open letter urging the British people to ignore “…a minority of managers from Britain's largest companies,” and instead support Britain’s small businesses with a ‘leave’ vote on 23 June.

The emphasis of the letter gave a strong focus to the ideas of flexibility and adaptability; something the signatories of the letter said EU membership hinders, namely commenting that “…we deal with the EU's constant diet of unnecessary regulations which add to our cost base, reduce our bottom line, and raise prices for our customers for no return.”

Remain: Better Trading Channels with Europe

This point has been argued so much it barely bares repeating. But we will because, well, it’s one of the biggest inflection points for SME owners who export to the rest of Europe.

Unsurprisingly, the ‘remain’ campaign has gained almost unanimous support from large companies who do business with Europe on a daily basis. Equally unsurprising is the fact that small businesses who also happen to do business with Europe have also been piping up in favour of a ‘remain’ vote, as despite assurances on both side, it’s hard to predict what trade relations with the rest of Europe will look like post-Brexit.

Leave: Cost of Membership is Too High

The often-cited figure that you see splashed across our television screens (not to mention busses) is that the UK sends £350 million per week to the EU. Though this figure has come up against scrutiny (it’s said that a rebate is deducted before payment, making the actual figure around £280 million per week), it’s difficult for anyone on either side of the equation to argue that that’s not a significant sum.

Though the cost of membership isn’t as big a deterrent to staying in the EU for small business owners than it is to the general public, it’s still a point of contention, with 69 percent of SME owners saying that the high cost of EU membership will affect their vote, according to the FSB.

Experienced Tax Accountants

To speak with a professional accountant to discuss the potential impacts, positive or negative, the results of the EU referendum may have on your small business, contact us today on 020 8780 2349 or get in touch with us via our contact page to arrange a complimentary, no obligation meeting.