What Does Brexit Mean For Small Businesses?
Brexit is perhaps the single biggest political and economic upheaval our country has seen in over a century, and it brings with it a whole heap of uncertainty. Not just because it’s a big change (which always brings uncertainty), but because we still don’t actually know what’s going on, when it’s going to happen, what any of the details are – or if it’s going to happen at all.
Brexit will undoubtedly impact a huge variety of businesses from every sector, industry and of every size. But while bigger businesses may have a hefty cushion of money to fall back on while everything sorts itself out, many small businesses aren’t lucky. For them, Brexit is more of an immediate issue, and something many are trying their best to prepare for. But before you can prepare for anything, you need to know how it might impact you, which is why we’ll be looking at today.
Brexit Preparations And Small Business
Brexit has been on the cards for over 3 years now, and while the delays keep coming, it is looking more and more likely that the UK will make a hasty exit from the EU, with or without a deal. Bearing this in mind, it would make sense to prepare for Brexit as much as possible before it happens. Recently YouGov teamed up with Sage to look at Brexit preparedness within small businesses and… well, the results speak for themselves:
- While 66% of small businesses say that Brexit will impact them, only 21% have actually started adapting their business processes to prepare.
- 40% of UK businesses aren’t sure when they’ll start preparing, and 34% aren’t sure how long they would need to truly prepare for Brexit.
- 45% of UK businesses say Brexit is impacting their confidence – and is therefore impacting their business.
When you think of how close we are to the deadline – which is now this month – that’s quite frightening.
Import And Export After Brexit
One of the major concerns for business owners is the trade of products or services with EU countries. If your business relies on goods, materials or services from outside the UK (or sells outside the UK), the import and export could become very difficult. The red tape is likely to increase, and the full impact will only become clear when we know if we exit with or without a deal. With a deal, the Chequers Agreements states that there could be a new kind of ‘frictionless’ free trade area, devoid of customers declarations and regulatory checks, meaning that products would only need one set of approvals for either market. However, in a no-deal scenario, Britain would switch to being a third country in the eyes of the EU. This means more customs duties would need to be paid, more declarations made and people looking to import or export would need to register with the government. If you are importing or exporting, the current advice to prepare your business is:
- Register for a UK Economic Operator Registration and Identification (EORI) number. Businesses that already have an EORI number from another member state (one that does not start GB) can continue using it for now.
- Decide if you want to hire an agent to make import and/or export declarations, or make them yourself by, for example, buying software that interacts with HMRC’s systems;
- Contact the organisation that moves your goods to see if you will need to provide any additional information to them.
- Get ready to comply with any instructions that may be issued by EU-member states that you export into.
VAT After Brexit
Although domestic VAT within the UK won’t be affected, that doesn’t mean there won’t be changes. VAT on imports and exports will almost certainly go up, which means the price of a lot of things will increase. For small businesses, this could mean significant cash flow problems if VAT has to be paid immediately, on top of an increase in admin demand to handle it all. If you’re exporting, then you will need to be aware of the VAT requirements of the EU country you’re selling into, including registration and reporting – which could take a lot of leg work and cause delays if you don’t prepare in advance.
Employment Issues After Brexit
This is our area of expertise, and the one we’re most worried about. Regardless of whether the Chequers Agreement or a no-deal Brexit takes place, the free movement of EU citizens will come to an end. This will directly impact any UK business of any size employing EU citizens within the UK. The current proposals to protect the rights to work of EU citizens through a ‘settled status’ scheme are already causing friction, with many already choosing to leave the UK entirely before they are forced out. This could leave a gaping hole in your workforce.
The plus side of this in employment terms is that even in the event of a no-deal Brexit, a lot of things will likely stay the same. If we do come out, the European Union Withdrawal Act will automatically convert all EU employment law as it stands before Brexit into UK Law. The Employment Rights (Amendment) (EU Exit) Regulations 2019 will make some small technical changes and introduce new provisions intended to preserve UK-located EWCs but employment law will otherwise remain the same. What the UK government decides to do with it after that is anyone’s guess.
But at the end of the day? The answer to ‘how do we plan for Brexit’ is still a firm ‘we don’t know’. No one can predict the future, so any suggestions about what the business landscape will look like, what will happen to the markets or what would be the best way to prepare for them are mostly guesswork. Educated guesswork maybe, but still guesswork. And while Brexit has filled thousands of column inches for many years, it isn’t the only thing to do so. If you were to go back over the last 100+ years you would find similar fear-inducing events dominating the news, with uncertainty plaguing the headlines. So our best advice is to try and make some smart business decisions, protect what you have and make yourself and your business as agile as possible, so that you can adapt to whatever comes.
If you would like help or support preparing your small business for Brexit, just get in touch with the team today.
0203 669 2216