With Britain poised to leave the EU, there are still more questions than answers. Whether the UK leaves with a withdrawal agreement or exits on a no-deal basis is perhaps the most significant of them all, and the one that’s proving the most divisive.
It’s therefore not possible to be certain about every eventuality which could affect your business but there are some things which we do know. Here’s a closer look at how Brexit will affect your small business and some steps you can take right now.
As part of the EU, Britain is part of a customs union which permits the free movement of goods around the member countries (as well as the European Economic Area). Post-Brexit, the restrictions that apply will depend on whether a trade agreement has been struck.
VAT will not be abolished once Britain leaves the EU as it’s an important revenue stream for the public purse. The government will have more freedom to implement rules and procedures that it sees fit without being bound to EU regulations. However, it has committed to keeping things as unchanged as possible to minimise disruption to businesses.
Unless a customs agreement is in place, imports and exports between Britain and the EU will be subject to VAT. This will make both imports and exports more expensive and if you have EU customers, it may affect demand.
There will be some administrative changes, such as the abolition of the EC Sales Lists and Intrastat.
Practically, there will be some procedural changes to the payment of VAT. The government has decided that VAT on imports can deferred until the VAT return is completed rather than on arrival. This is good news as it means you won’t need to pay for it instantly. Unfortunately for exporting, it’s a different matter as the country you are exporting to will treat your goods as Rest of World. Every nation has their own procedures for charging for VAT so you’ll need to check these individually.
Britain will be able to set its own taxes, and there have been some rumours that Corporation Tax could be slashed in a bid to make the country more attractive to external investors. This is not yet certain; direct taxation changes are not yet known in depth.
If you have property overseas, your tax burden could increase in other countries. This depends on whether the UK is able to negotiate protection from the charges levied against the rest of the world. This varies from one country to another but as an example, France charges 49% tax on capital gains for non-EU residents. Therefore, it’s possible that you could end up with a significant tax bill whereas pre-Brexit you were exempt.
What to do right now
Many businesses aren’t yet Brexit-ready and risk being caught out. It’s never too soon to register for the documentation you need, and will help you avoid a last-minute rush.
Right now, you should obtain:
You should also decide how you plan on handling your declarations for imports and exports. There is the choice of acquiring software to complete the declarations yourself, or using the services of a specialist.
We Can Help
There are likely to be sweeping changes that affect small businesses and a number of issues to consider. The potential to make errors and incur fines is significant at such a tumultuous time so it’s highly advisable to retain the services of a professional. We can help with all aspects of taxation, payroll and accountancy – just get in touch today to find out more.