The UK is preparing to exit the European Union, and is engaged in a period of uncertainty with consistently emerging possibilities and issues to address.
Since the results of the Referendum in 2016, organisations have been questioning how they will be affected by a move away from the EU. There is still a great deal of apprehension about how business interests will be protected post-Brexit and the government has a long way to go to reinstate confidence.
Brexit is of course a work in progress, and as we wait for the changes to be fully realised there are questions around its impact within a number of areas – from import and export costs, access to labour and grants and subsidies.
Without a clear indication of what to expect, it is difficult to confidently invest in future growth. Organisations need to understand how they can adapt to the climate of a post Brexit UK, along-with the risks to their operation and how these can be monitored and prepared for.
Questions to help prepare for the changes ahead:
Operational:
- Is a re-think of operating structure and legal entity required to take advantage of changing regulatory and tax developments?
- Will stakeholders be affected and could this have consequences for business processes?
Market Impacts:
- If there is a fluctuation in exchange rates or interest rate movements, what will be the business impact?
- Should the debt capital markets suffer disruption, are sufficient financing options in place?
Regulation:
- If compliance policies, strategies and internal controls are tailored to EU regulations, will they need reviewing?
- Do operations rely on existing passporting rights?
People:
- Will restrictions on freedom of movement for workers affect operations?
- Could employee recruitment be influenced and will this result in a skills gap?
- Do employee policies need reviewing?
Business Tax:
- Does the tax efficiency of business operations, capital structure or profit repatriation depend on EU Directives and EU law?
- How will the potential loss of EU grants and funding impact operations?
- What is the potential impact of the common consolidated corporate tax base on group company reporting?
Data Protection:
- Is personal data moved between the UK and EU member states?
- Consider where the major data processing decisions are made (in the UK, another EU member or a jurisdiction outside the EU) and if this needs reviewing
- Are service providers in other EU member states used to process personal data on an organisation’s behalf?
VAT
- To what extent will potential VAT changes impact on VAT recovery?
- Will VAT case law established through the European Court of Justice still apply?
- If you import or export goods to other EC member states, do you have an EORI number?
Contracts:
- Are amendments required due to specific references to EU territories, laws or regulators
- Are all contracts still applicable and can they be performed in the manner originally intended?
- Will contracts become economically unviable due to additional tariffs or costs?
Many businesses are waiting to see what type of Brexit is realised before making any, potentially costly, changes to their structure or processes. While negotiations are ongoing though, it is worthwhile spending some time gaining a clear understanding of the challenges ahead. This may just be investing in some due diligence, enabling decision makers to consider the likely budgetary needs whilst devising a coherent policy for managing change.