Last week, I was invited to take part in a live video webinar with Deirdre McPartlin, Manager UK at Enterprise Ireland (EI) at their London HQ on Shaftesbury Avenue. (Enterprise Ireland is the Irish government body tasked with assisting Irish companies to expand abroad.)
Having the largest percentage of exports to the UK market, the Irish food and drink sector is the most exposed industry to any negative economic impact of the Brexit decision. Consequently, the EI has been inundated with questions and scenarios from Irish companies concerned about the impact of Brexit. They know they must act swiftly to ensure they show their commercial intent in the UK market, but need advice on how best to do this.
Essentially, in order to continue trading and beat the UK homegrown competition, who are biting at their heels, it’s vital that overseas companies have a strong presence in the UK and demonstrate their commitment to both their current and potential UK clients.
Having personally accrued over twenty years of experience advising and helping overseas companies to setup their businesses in the UK, I was delighted to impart some of this knowledge to help allay their fears.
The general topics we covered included how best to setup and secure offices in the UK, to explain what challenges they may face and how to navigate the pitfalls. Scenario questions drilled down to:
• How to decide on the legal entity of a company (what’s best - a partnership, limited company or branch)?
• What are the implications on corporate tax, VAT and NETP?
• How to create contracts for employing UK-based staff?
• How long does it take to setup a business or create a bank account in the UK?
• How should they go about raising funds?
• What are the most common pitfalls?
The webinar recording is due to be released in a couple of weeks and we’ll be posting it on our website and LinkedIn to help generate awareness…
In the meantime, let me re-share several key actions that companies looking to expand or fortify their position within the UK market need to implement to succeed in Post-Brexit Britain.
• Figure out Customs and Entry point actions
If you are a company that imports goods into the UK and you are looking to protect your market share, you need to understand customs. For instance, first of all you will need to have an Economic Operator Registration Identification (EORI) number or you may suffer increased costs and delays.
Another item to consider is the Transitional Simplified Procedure (TSP) concession, as HRMC has announced that companies looking to import and export goods, will be able to transport goods from the EU into the UK without having to make a full customs declaration at the border, and will be able to postpone paying any import duties. The caveat is that this simplified process is only for those companies with a legal presence in the UK. There certainly are pros and cons to establishing an entity in the UK, but in terms of navigating in the UK market, it might be time to start weighing those options.
• Perform a Supply Chain Audit
Is your company working within the UK? If the answer is ‘yes’, you might need to carry out a Supply Chain Audit. This will help you establish a solid understanding of the necessary steps and precautions you will need to implement throughout your operations to ensure that Brexit does not impact in your flow of supplies, resources or goods. You need to understand the impact of dealing with longer lead times or potential hold-ups at ports and borders, and how they can affect your supply process.
• Adjust the Recruitment Process
Brexit does not only restrict movement of goods, but also movement of people. There has been a lot of ambiguity around the post-Brexit relationship between EU citizens and the UK. Although EU citizens living in the UK can apply for settlement to stay, status for those who are living outside the EU still needs planning.
An alternative that some companies might want to consider is hiring non-EU talent, in which case, they would need to understand the process to hiring international talent, as it may be less straightforward than they are used to. Whatever the implications on the hiring process may be, companies need to consider adjusting their recruitment process by taking timelines, costs, eligibility, and duration of visa application into consideration.
• Secure Funding
Any company planning on increasing or retaining their market share in the UK, might need to consider external funding at some point. They need to ascertain how potential investors or financial institutions will evaluate their company. They need to consider if their business will be seen as either Brexit-proof or Brexit-susceptible.
An inherent risk associated with Brexit is the decrease in value of the Pound sterling, which means that companies will need to strategise potential actions to minimise this effect in order to appease invertors’ doubts.
• Think about a pricing strategy
Brexit might also impact most businesses with additional costs for producing and delivering their goods or services. Defining a post-Brexit pricing strategy is another key action most companies should implement to prepare themselves adequately. If higher costs are a result of Brexit, they might want to consider either absorbing those costs in order to not produce a disadvantage for themselves in the market or pass the cost directly onto the consumer.
• Have Plans B through Z
Ultimately, companies with a post-Brexit plan have the upper hand and will secure their place in the market much quicker and with little to no complications. A sound post-Brexit plan allows them to be agile and act promptly regardless of any outcome. On the other hand, companies who don’t have a plan could face more challenges leading to a decrease in their market share.
Consider different Brexit outcomes and plan accordingly. Start by identifying the risks that your business would face in terms of customers, funding, supply procurement, operations, recruitment, etc. Then, come up with realistic measures to avoid or minimise those risks and finally construct several plans for all possible outcomes.
Facing Post-Brexit might seem daunting, but here at Ecovis Wingrave Yeats we do not see it a threat to companies, but rather as an opportunity for growth. With more than 30 years of experience and over 50 professionals in Accounting, Audit and Tax Compliance, Business Advisory and Data Analytics, we are ready to help companies entering the UK market, UK companies looking to maintain their market share and those UK entities looking to expand overseas.
Please get in touch and find out how we can help you.