David Eagle, Partner at BDO LLP on Brexit Uncertainty

How can UK businesses combat uncertainty after the Brexit vote?

Business Strategy –

• Set up a Brexit task force within your business.

• Analyse how different post-Brexit trading models will affect your business.

• Build flexibility into your business plan.

People –

• Review the potential impact and give employees what reassurances you can (even more relevant to employees of EU or non-EU origin.)

• Review employee contracts and consider what action may be needed to ensure talent is protected and retained.

Tax –

Keep focused on any changes in tax and UK transfer pricing rules that emerge and keep in mind the following:

• Managing your VAT registrations and administration costs.

• The working capital needed to finance the VAT cash flow costs of imports and exports.

Mergers and Acquisitions –

If considering an EU-based business acquisition it could be prudent to move more quickly before Brexit negotiations begin or are completed. Can you bring forward a sale to an EU based competitor before the Brexit negotiations are finalised?

Operational Considerations –

Take a look at your supply chain and ask:

• How would total costs compare from EU suppliers versus non-EU suppliers?

• Are sales within the EU large enough to justify relocating some operations to an EU site to avoid a customs duty hit on margins?

Contracts –

For contracts that will be active beyond 2018, consider carrying out a Brexit review to determine the flexibility to survive potential changes.

Where new contracts are being negotiated, consider whether to incorporate break clauses or price adjustment clauses following Brexit.

Regulation –

If your business is operating within the regulated industries, consider transferring functions within the EU to continue to benefit from ‘passporting’.