Understanding the Brexit landscape is a bit like navigating a maze still under construction: just when we think things may be on track, a new wall or barrier is added to the outermost perimeter. The accounting profession has already had to change and become more flexible to accommodate the uncertainties around Brexit.
For many advisors, Brexit has already impacted business planning decisions. Many businesses are making less ambitious revenue forecasts, while others have held off on investments to focus on the risks posed by each potential outcome.
Here are four challenges most relevant to accountants and their clients.
With Brexit, HMRC claims that the UK will have more flexibility on VAT principles in being able to set its own VAT rates and to adjust zero-rating or exemptions. If the UK leaves the EU with a deal, VAT is most likely to be retained even after the transition period, though categories and rates may change.
If the UK leaves the EU with no deal, the government is currently pledging that UK businesses trading with the EU will be able to account on these imports within their VAT returns, rather than on the point of entry. This plan is intended to avoid potential cash-flow issues that could well occur if customs, excise and VAT procedures to goods traded with the EU were applied on point of entry.
VAT-registered businesses have already made the transition to Making Tax Digital (MTD) for VAT, putting them in a good position to deal with either scenario, with technology solutions that can easily accommodate these small variables in VAT handling.
Suppressed economic activity
Financial downturn is a reality many businesses may experience regardless of the Brexit outcome. In preparing to offset it, accountants will need to use technology to differentiate so they can offer innovative solutions to their clients and stand out from the crowd.
Technology may also prove to be a real game-changer in the fight for talent acquisition as some financial services businesses relocate to Europe.
Delays to Making Tax Digital
MTD has been delayed by Brexit in the past. With resources being diverted to Brexit, it’s possible that there will be more delays to come.
The key to handling MTD delays is in educating clients and working to get them prepared and ready. Regardless of when MTD is fully rolled out, its fundamentals are designed to encourage businesses to embrace digital accounting, which will ultimately save businesses time and resource.
Increased demand for advisory services
Some practices have already seen an increase in the number of clients turning to them for advice on the various risks posed by Brexit.
Increased advisory responsibility is a new opportunity to provide answers and possibly even further added-value services. These include advice around long-term business planning, guidance and specific advice tailored to their industries.
For more on how you can support your clients through uncertain times with advisory services, read on here.
How can accountants prepare for the unknown?
The increased demand for advisory services will lead to increased workload. This is where technology can help, regardless of the Brexit outcome. Introducing automation where appropriate to drive efficiency and integrating bookkeeping solutions into the accountancy technology landscape will unlock time for more value-added services.
Advisors who embrace advisory services are in an excellent position to help their clients to flourish despite Brexit uncertainty, and will continue to build a loyal base of clients and achieve growth.