It may seem like an impossible task to prepare for Brexit
when nobody really knows what’s around the corner, but accountants have an
important role to play over the next few months and beyond.
At the time of writing, the government has been granted a
delay to Brexit to 31 October 2019, although the UK can leave the EU before
this date if parliament passes a withdrawal deal.
In this blog, we look at how accountants can help business
make preparations for Brexit. We also look at the advice being given to its
members by the AAT (Association of Accounting Technicians), the professional
body that awards qualifications in skills-based accountancy and finance.
Key issues to consider
The situation may be changing almost daily, but businesses
need to be ready for any and every eventuality. Whether you work for a firm of
accountants or within the finance department of a large company, here are few key issues to consider when it comes to the businesses you are
advising.
- Do these businesses buy
from or sell to the EU?
- Are they likely to
relocate as a result of Brexit?
- Are any of their
customers likely to relocate as a result of Brexit?
- How will their supply
chain be affected?
- Is uncertainty around
Brexit affecting their income/profit margin?
- Will they suffer from
skills shortages if free movement of people ends?
- Which EU laws affect the
operation of their business?
- Are they prepared to
weather a short or long-term economic downturn?
While uncertainty is generally considered a negative in
business, the AAT says that accountants may find their services in more demand,
as: “In times of uncertainty, clients need more advice, along with extra help
with planning, forecasting and managing working capital.”
How might Brexit
affect where accountants work?
One concern is whether UK accounting qualifications will
continue to be recognised elsewhere in Europe after Brexit, affecting accountants
working abroad. Even if a deal is reached, under the Draft Withdrawal
Agreement, you would need to apply for recognition in all of the countries
where the firm you worked for operated, even if you were only working in one.
What will be the effect of Brexit on financial
services?
At present, most of the UK’s financial services
legislation comes from the EU, with “passporting rights” allowing each country
to access the markets of others. The UK’s trade with countries outside the EU
is also often accessed by deals organised through the EU.
The run up to Brexit has seen several firms
offering financial services leaving the UK, with more expected to leave if and
when Brexit goes ahead. Brexit is expected to affect the UK’s status as a
leader in financial services, as well as impacting on tax receipts and jobs in
this sector
What happens if the
UK crashes out of the EU without a deal?
There are many uncertainties around a No Deal Brexit.
Concerns include delays to the movement of goods and materials because of new
customs checks, changes to the VAT payable on items coming into and going out
of the UK, the sudden end of air traffic control agreements, and issues over visa
and work permits for EU nationals working in the UK and UK nationals travelling
for business to the EU.
More information can be found here:
https://www.gov.uk/government/publications/vat-for-businesses-if-theres-no-brexit-deal/vat-for-businesses-if-theres-no-brexit-deal#before-29-march-2019
The AAT has also published a summary of how a No Deal scenario will affect accounting and auditing, for example, if a UK company has a branch located elsewhere in the EU:
https://www.aatcomment.org.uk/accountancy-resources/brexit/accounting-and-audit-in-a-no-deal-brexit/
How can accountants
advise their clients?
Anyone working in finance and accounting should be offering advice
now to employers and clients about how they can be as prepared as possible for
Brexit. Whether we leave with or without a deal, companies will need to be ready
for the effect that leaving the EU could have on everything from the supply
chain to movement of people to profit margins.
Accountancy firms should explain the potential scenarios –
using the facts available rather than relying on speculation – and the range of
options open to their clients, so that they are as prepared as they can be.
This can be done through in-person meetings, but also with information sent out
in newsletters and on social media.
Conclusion
As the AAT points out: “The Bank of England
believes that economic activity will be suppressed by either a deal or a
no-deal Brexit. That means individual companies will face more challenging
trading. Accounting professionals, on the other hand, tend to do well in
difficult times. The uncertain days ahead are an opportunity for them to get on
the front foot and use their advisory skills to help clients.”
