VOCATIONAL TRAINING

EST. 1982

95% learner satisfaction

100% employer satisfaction

How will Brexit affect Accounts?

CMS Vocational Training Hadyn Luke posted this on Wednesday 17th of April 2019 Hadyn Luke 17/04/2019

Tags:

How will Brexit affect Accounts?

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.”

Subscribe to the blog