Now that Article 50 has been triggered the reality of Brexit will soon start to bite, and with a possible slowdown in the economy, UK businesses will be well advised to take stock of their situation and consider how Brexit is likely to impact them. As with most challenges in business, those who are positive and see the opportunities rather than the threats will probably fare better – flexible businesses will survive.
We set out below some of the key issues for UK businesses to consider, including access to labour, impact on supply chain and new tariffs. Although given the uncertainty and uniqueness of the situation, there will no doubt be more matters to cover in the next two years.
Identify key contracts with customers, suppliers and other trading partners
Businesses should consider how Brexit will impact agreements with suppliers, customers and other trading partners, and whether there is a risk of continuing to trade with these customers and suppliers. If sales to the EU are substantial, consider looking around for new business opportunities outside the EU or relocation to an EU site to mitigate the adverse effects of additional customs duty on margins. If there are threats to the Supply Chain, consider alternative sources of supplies.
Consider any cross-border implications
Ascertain the costs of additional import duties which may arise as a result of Brexit.
How will Brexit affect the workforce?
Assess staff contracts, staff composition and monitor recruitment needs, but avoid making decisions based on speculation of EU workers’ rights in the UK. Develop a communication strategy to staff to reassure EU Nationals.
What will the regulatory impact be, eg. “passporting” rights for banks and financial services?
Again, consider transferring functions to the EU in order to obtain continuing benefit from the Single Market.
Consider foreign currency exposures based on devaluation of sterling
Can this be managed by hedging, such as forward buying and forward exchange contracts or matching receipts from customers in Euros with payments to suppliers in Euros?
Consider substitute products for supplies which may be affected by excess tariffs
Although the outcome is unknown, businesses should consider exposures to increased costs and regulations from imports and exports and take appropriate action, such as switching suppliers or locations.
What about data and IT?
If businesses use IT cloud services then they should consider how these may be affected, as well as understanding what needs to be done to prepare for GDPR (General Data Protection Regulation) in the EU in 2018.
Plan and prepare…
…and assign internal responsibility for the Brexit plan and risk assessment (Brexit Committee).
Consider what you should be saying about the risks and potential impact of Brexit in the annual accounts (strategic report)
The Financial Reporting Council has released guidance on the various issues to consider.
How can we help?
With the fast-moving Brexit environment, we understand how difficult it can be to keep abreast of the latest developments, whilst managing the everyday running of your business. We can help you to stay ahead of the game, and work proactively with you to help you achieve success throughout Brexit. Furthermore, if you are seeking advice about doing business in other parts of the words as a result of Brexit, eg. Asia or The Americas, then as a member of the international UHY network, we can introduce you to other UHY member firms to provide the local advice you will need.
If you would like further information on the services we can provide to you, please get in touch with your local UHY contact or our Head of Brexit, Martin Jones.