I don’t think anyone in the business community truly believed that there’d still be a lack of clarity on Brexit with fewer than 50 days to go. But this is the reality that firms must now respond to.
It’s a very troubling time for UK businesses, or really any business with operations that are impacted by the UK economy, as the political uncertainty around a Brexit agreement drags on. Companies are understandably triggering emergency plans, the CEO of Airbus issued a plea to lawmakers to avoid a hard exit, and several major food retailers have warned that higher prices and empty shelves are the realities of a no-deal Brexit due to the high reliance on the EU for produce.
TMF Group’s Consultancy Solutions team has been fielding some common questions from firms with European operations.
If you’re among those who have been taking the ‘wait-and-see’ approach, it’s time to hop off the fence and urgently start putting Brexit contingency plans in place. Here are five things you can do to help minimise the impact of trading interruptions - be it a deal or no-deal eventuality.
1. Establish an entity outside of the UK
While few suggest abandoning the UK completely at this (or any) stage, establishing an entity in mainland Europe is a very popular action, and for good reason; it helps to ensure operational continuity post-Brexit. More than 250 UK companies have reportedly expressed an interest in expanding operations in the Netherlands for example. But depending on your industry and needs as a business, there are four other key European jurisdictions that may best suit you.
2. Establish an entity in the UK
A hard Brexit has economists and business leaders forecasting the worst for Britain, but the UK remains the world’s 5th largest economy, and business in the country certainly won’t grind to a halt after 29 March. With a population of more than 66 million requiring goods and services, setting up a UK company is an essential move to retain a trade link with the country and therefore your strategically vital local customer base.
3. Review your contracts and suppliers
Just 7% of the proactive business leaders we surveyed had mapped and audited their supply chains in preparation for Brexit.
It’s essential to conduct a review of your contracts in order to identify any that may leave you exposed. Likewise, you should speak to all of your suppliers and receive reassurances that they’re far along on their own contingency plans.
4. Anticipate changes in UK and EU regulations
Big question marks remain over exactly how and when regulation standards will shift, but when they do, there will be knock-on effects.
The pharmaceutical and healthcare sector is expecting the European Medicines Agency (EMA) to operate at a reduced capacity as it relocates from London to Amsterdam. The future ‘EU versus UK’ regulation of clinical trials, pharmaceuticals and medical devices and their impact on drug manufacturing, packaging and supply are other areas being examined.
VAT, Customs Duties and Withholding Tax are the primary taxes set to be affected by Brexit, but Insurance Premium Tax and changes to the transfer pricing rules coming out of BEPS may indirectly play an important role too.
Make sure you’re across the latest UK and EU regulatory discussions and clarifications for your industry, and understand what changes may be ahead. It’s also important to check the post-Brexit validity of any associated business licenses that you hold.
5. Conduct a staff audit
How dependant are your operations on the free movement of EU citizens? Do you know how your legal and HR responsibilities will change? If you’re relocating operations, is there an availability of staff locally or do you have enough existing employees willing to move?
Conducting an audit of the people in your organisation, at all levels, is key to understanding what their post-Brexit residency and employment status will be. Just 11% of our proactive survey respondents had audited their employees’ work locations, immigration statuses and employment contracts. Businesses that don’t do this risk surprise losses of personnel in senior positions or with unique skill sets that may be hard to replace.
Talk to us
The clock’s ticking, and while some of the abovementioned Brexit-readiness actions may seem overwhelming, with the right support they don’t have to be. Our experts stand at the ready to ensure you are not left navigating this uncertainly alone.
Our comprehensive QuickStart: to Brexit services help you figure out what Brexit means for your business. From working sessions to readiness assessments and ongoing guidance and support.
Contact us to find out how we can help you.