Interview: how businesses can keep up with Brexit developments

To help businesses do that, Mazars recently launched Brexit Radar. Below Catherine Hall, international tax partner and Head of tax at Mazars, UK, tells us about the tool and how businesses can prepare to succeed in a world that is still being defined.

In your recent experience what are the priorities of businesses when it comes to Brexit developments?

CH: The key priority for businesses is finding the crucial information and responding to regular changes, so they can keep going. That means staying up-to-date with changes happening globally. You may be domestic in terms of your customers, but your goods or services are likely, at some point in the supply chain, to come from outside the UK.

There is a lot of information out there that is changing every week. Take the UK government website: it can tell you about Brexit facts, but it does not provide business leaders with an understanding how it applies to their situation or that of their competitors. Without assistance seeing the big picture, it can be hard to put developments into practical context and keep up regulatory updates.

Are there particular areas that keep changing?

CH: There are topics that are changing and others yet to be agreed. Changes to indirect taxes have forced businesses to adapt very quickly. Some businesses had to wait an extra month after the December 31 deadline to see what would happen with social security and people’s movement. Data is yet to be agreed upon, and there continues to be debate around Northern Ireland’s place in cross-border business.

Why has Mazars launched Brexit Radar?

CH: We launched Brexit Radar to enable businesses in all jurisdictions to access in one place information about operating in Europe and the UK. Alongside the facts, it encourages businesses to think more broadly and consider what is happening elsewhere. Knock-on consequences can come from all over the globe as regulations and laws change on tax, mobility, data, the supply chain and more.

Mainly it is aimed at privately owned businesses that don’t have large internal tax functions and are having to manage developments on a daily business. It will be updated to reflect recent developments and is intended to give peace of mind and highlight areas to think about that may not have been considered.

You work with privately owned businesses in particular. How have they been affected by Brexit in the last 12 months?

CH: It’s been a challenge for them to understand the new requirements, adapt to them and ensure they remain competitive. For some, change has led to opportunity and a chance to consider if their model is fit for purpose and look for efficiencies. Many have found it useful to ask if they would structure their business now the way they did in the past. Some, especially retailers, have moved further to online.
The downside has been implementing new VAT regimes and figuring out how to move goods across the new border between the UK and EU, as well as some products being harder to source. There are also businesses that have had to review where their people are based, introduce new work permits and factor in new tax profiles and risks.

Are small and medium-sized businesses better suited to keeping up with these changes?

CH: Smaller businesses have agility on their side, they are entrepreneurial in nature, and they’ve often overcome varied challenges in their recent past. I’ve been working with clients to review their business models, looking into their critical markets, ensuring their corporate structures match their current success and that they know how to manage new foreign exchange demands.

You need a good relationship with your adviser to do this right, to navigate the change. There is undoubtedly more red tape, but an adviser can help with navigating through that red tape.

What are the main tax issues arising from the UK’s departure from the EU?

CH: Changes to indirect taxes - VAT and customers - are on everyone’s minds. The other challenge is people and how to move them when immigration visas are changing and some country borders remain closed. At the same time, businesses are also looking for opportunities, asking where they may have had exposure before and can make the most out of the new relationship.

And finally, businesses are increasingly asking what tax authorities will do when the pandemic fades and they need to make up for economic incentives. We expect stricter governance and compliance on transfer pricing and cross-border payments, so businesses should make sure they are complying with post-Brexit obligations.

What’s your advice to business leaders trying to monitor and react to Brexit developments?

CH: Take time to understand your pinch points but keep an eye on the future. Think about where your value is likely to come from in a few years’ time so you can make informed decisions. There will, of course, be urgent problems that need fixing but try and implement them with an eye on where you want the business to go.

Borders and markets are going to re-open post-Covid and businesses need to be ready to make the most of it. And overlay that with a focus on growing consumer considerations around factors like supply chain sustainability in order to make yourself attractive in a competitive world.