Brexit is done…on the 1st January 2021, the UK officially left the European Union.
Brexit alone is a significant shift in the status quo and will require businesses to adapt. Yet we’re now managing the Brexit transition in the midst of the COVID-19 pandemic.
The UK government has created this useful diagnostic tool to help business owners better understand how Brexit may affect them and what they can do to prepare.
You can jump ahead to the sections you’re most interested in, using the links below:
What we think
We will feel the impact of Brexit in ways we’ve not thought about, for longer than we imagine. Whilst the next few months will present challenging trading conditions, there will be opportunities arising. As business owners, we have a great opportunity to show our teams, our customers, and our community our true value. This period will pass and the aim is that your business is in the best shape possible when it does. You’re not alone. Take care of yourself, your team, your clients, and your community.
How can I get through this in the best possible shape?
Monitor your cash position frequently and make decisions now that will improve your cash position longer-term
Engineer your business for profitability and revise your business model if needed
You’re not alone in this and lots of people are looking to you for leadership
Below, we’ve developed a framework for businesses to work out how to manage Brexit in the context of COVID, or ‘Brexit x COVID’:
Risk management and forecasting
Assessing the potential impact of Brexit on your business will be an ongoing exercise. Here are some issues and questions to consider:
- Do you have a forecast for 2021? Are you tracking your performance against this?
- Does your forecast consider potential changes in demand?
- Could your business survive a period of:
- Reduced profitability?
- Reduced cash levels?
- Debt repayments?
- If you haven’t created a forecast on Xero yet, here’s how to get started.
Brexit will initially cause the most disruption to cross-border trading arrangements. The government has produced definitive guides on how to import and export goods between the UK and EU. Questions to consider:
- Do you have the right business structure post-Brexit?
- Will you need an EU subsidiary?
- This useful diagnostic tool will help you work out the answers to these questions.
To get a comprehensive understanding of what changes you need to make post-Brexit, we advise all businesses to complete this diagnostic tool. Our ‘How Brexit changes how you do VAT’ article outlines some of the post-Brexit VAT changes. Questions to ask yourself:
- Do you import or export goods from the EU?
- Have you previously completed an EC Sales List?
To weather the combined storm of ‘Brexit x COVID’ all businesses will need to ensure that they have sufficient cash reserves to continue trading and to seize opportunities that may arise. Questions to ask yourself:
- Do you have sufficient cash levels to continue trading through the next 12 months? These resources will help.
- Do you have access to finance if you need it? (Both for operational requirements but also in case of potential opportunities that may arise).
- Are you protected against potential FX risk?
Regulatory & Tax
After the end of the transition period, EU company law no longer applies to the United Kingdom. Questions to ask yourself:
- Are you aware of any regulatory changes that may affect your business?
- What happens with data and GDPR?
Managing the human element of Brexit is a core consideration and often overlooked. Questions to ask yourself:
- What support does your existing team need?
- Will you have the right level of resource?
- Will you need to hire EU nationals?
- Are you prepared for changes to business travel?
If we can help you answer any of the questions above, please get in touch.
For Wow clients specifically:
This is what we’re doing to bring us all together to support each other through this and to extend a (virtual) arm around you. If you’re a Wow client and would like to find out more about any of the initiatives below, please email your Wow Accountant. They’re all part of your Wow service.
How Wow can help
There are many ways we can help you, here are a few options:
- Prepare forecasts
- Profitability reviews to increase your profitability and resiliance
- Help with funding
- Business structure/tax review
- Advice on VAT management
- Help setting up a company in EU member states
- gov.uk/transition – a diagnostic tool, developed by the government to help you understand what you can do to prepare for Brexit.
- Searchable database of all UK government guidance and regulation relating to Brexit. It includes industry-specific documentation
- EU guidance and regulation by industry
- EU notice on changes to company law resulting from Brexit
- EU notices on changes to trademarks following from Brexit
Please always remember
The resources contained in our Brexit Support Hub are intended to help you and your business and are no substitute for professional HR & legal advice. Each business is different and you should get professional advice relating to your specific circumstances. If you’d like to be put in touch with someone, please let us know.