Brexit, or the United Kingdom’s exit from the European Union, has a great impact inour companies. Whatever size they are, Brexit poses a challenge for us in both territories.
Our companies must know the effects that this break will entail. They will also have to anticipate changes and take measures that allow them to adapt to the new rules of the game.
These are tough times for businesses within the United Kingdom (UK). Any company in our country will have its operations affected by the economy. As the political uncertainty surrounding an agreement for
Brexit, our businesses are affected.
Companies should be activating emergency plans. However, as is always shown, small businesses are the most affected by these agreements.
Don’t let the consequences of Brexit take you by surprise. Here are some tips for coping with Brexit changes in small businesses.
What is Brexit?
The word Brexit refers to the process of leaving the United Kingdom from the European Union (EU) after the result of the referendum held on June 23, 2016. It comes from the acronym of the English words “Britain exit”, which means exit from Great Britain .
On March 29, 2017, the United Kingdom notified the European Council of its intention to leave the EU. The exit took place on February 1, 2020, at which point the Withdrawal Agreement entered into force, which lasted until December 31, 2020.
As of that date, that is, from January 1, 2021, a “Trade and Cooperation Agreement” governs between the United Kingdom and the EU that defines their future relationship and represents a significant change for our administrations, companies and citizens. . These changes affect us in both the UK and the EU. Brexit translates into getting obstacles, which until then did not exist. The inconveniences affect our trade in goods and services, mobility and cross-border exchanges.
Take advantage of low interest rates thanks to Brexit
If you are a small business owner, the federal government will currently offer you low interest rates. This is possible because the federal reserve did not raise interest rates on loans before the Brexit vote. If this situation continues, it is time for you as an entrepreneur to obtain loans to invest in your business. Banking agencies and insurance microfinance institutions have good plans for you.
According to business consultants and other market stakeholders, a strategic entrepreneur can use this Brexit voting situation for his advantage. With this, you can request commercial loans that are available to you. However, before applying for these loans, it is good that you are both of the problems related to world business trends.
If you really believe that your income will increase despite the Brexit shock.
If you believe that your company can take advantage of Brexit and the demand for your products will improve or remain constant, we strongly recommend that you apply for those business loans; while they are still at low interest rates.
As a small business entrepreneur, this might be the best time for you to expand your business. Take advantage of the situation and inject more cash inflows.
Take into account the new customs formalities
The departure of the United Kingdom from the Customs Union as a result of a no-deal Brexit causes the flows of goods to be subject to customs formalities. If you are going to do business with Spain, for example, you must present customs import declarations in Spain. You will also have to deliver export documents or link to another customs regime for each flow of goods. In the same way, you must make the payment of customs duties and comply with customs control formalities.
Like all economic international trade operators, if your SME exports or imports between the two countries, it must be identified with an EORI number. This code will be valid throughout the European Union, for imports and exports that take place in the European Union. Your company must have an EORI number granted by the British authorities for the entry and exit of goods that occur in the United Kingdom.
It is essential that your company review its operations. This in order to identify the changes that you will have to face at the tax, administrative and organizational level. This will be the consequence of the international movement of goods. You must study the possible application of suspensive regimes that could lead to savings in new tax costs. Thus, the analysis of the supply chain, contracts and INCOTERMS is of special importance. All this so that you avoid disruptions in the delivery of merchandise and values in compliance with registration formalities.
Conduct a staff audit
How dependent are your operations on the free mobility of EU citizens? Are you aware of how your legal and human resources responsibilities will change? If you find yourself relocating your operations, are there employees available locally or do you already have enough employees willing to relocate?
Conducting an audit of the people who are part of your organization, at all levels, is key. This will help you understand where their place of residence and employment status will be after Brexit.
Very few companies audit the work locations of their employees. You must have knowledge of this and also of their immigration status and employment contracts. Companies that do not take this into account run the risk of losing staff in high positions or with unique skills that can be difficult to replace.
Anticipating Brexit changes
A big question mark remains as to how and when exactly regulatory standards will change. When this actually happens it will have a chain effect.
VAT, customs duties and withholding taxes are the main affected by Brexit. But the tax you will owe on the insurance premium and changes in transfer prices can also play an important role indirectly. All this arises from the BEPS
Make sure you stay up to date on the latest UK and EU regulatory discussions and clarifications for your industry. Understand what changes are to come. It is also important that you check the validity of any associated business licenses that you may have after Brexit.
The keys to keep in mind
Brexit is something that has taken many people by surprise.
Brexit will impact your business if you sell, buy or transport goods from, in or through the UK.
It is important that you stay informed of the latest news to know if new steps have been taken in the negotiation.
You should also be ready for a no-deal Brexit as soon as possible.
If you need specific information on how your business may be affected, you should visit the website of the government authorities. We will continue to bring you the news on this topic on the My T blog.