Brexit – take a deep breath

Tax advisers are starting to shift their attention towards the usual self-assessment filing deadline. This is especially true for smaller practitioners, myself included, where the responsibility for getting stuff done lies squarely on our shoulders.

Based on previous years, this means we will emerge from the filing fugue 1 February 2019 and the only thing we will have on our minds is how to make the most of the half-term break and some welcome rest and recuperation.

But what about Brexit?

Negotiations at present have the characteristics of a dog chasing its own tail, it’s never going to catch up. The 29th March 2019 deadline is the date we need to work towards and yet there seems no way out: the EU won’t accept the UK’s proposals, parliament is set to vote down any previously proposed deal, so what does that leave us with? A no-deal scenario?

Outlook for clients post-Brexit

Clients who import and or export to the EU only have the no-deal consequences of Brexit to consider, this is all the information that has been provided by government thus far. And hopefully, you will have been supporting affected clients in making appropriate preparations?

Clients with customers who export to the EU will be similarly affected as will clients whose suppliers buy their stock from the EU.

However you look at the UK trading situation from April 2019, all the ingredients for a short to medium downturn in activity, while we adjust to whatever trading relationship we agree with Europe, seems inevitable.

Hopefully, Brexit will not create recessionary conditions, but at present, this is starting to feel like wishful thinking. No one wants to return to the “banking crisis” conditions of 2008 and yet the outcome will depend on how quickly our trading relationships with the rest of the world will develop to compensate for any slow-down in our trade with Europe.

How can we best help clients in the lead up to Brexit?

As the scale of any disruption is speculative one thing we do not want to do is engage with clients on large scale changes in processes until we are more certain of the Brexit negotiations.

However, basic financial fitness could be promoted. I propose that we offer a “pre-Brexit” shake-down of clients’ balance sheets and profit and loss accounts to weed out inefficiencies. In this way, clients will have the best possible chance to weather any downturn in activity during 2019. This is not an audit in the classic sense, but a line by line check to remove any unwanted assets or stock, improve credit control and cash flow. My guess is we will all have to convert effort into cash at a much faster rate post Brexit.

Take a deep breath

Every business will face different challenges, but accountants are ideally placed to lead the charge. Not withstanding self-assessment obligations, in the coming months we should offer clients a Brexit physical: to determine their vulnerability to Brexit and help them design and implement a review of their business finances.

I am working on a bunch of resources that firms will be able to use to communicate these concerns with clients, and to offer appropriate help and support. Keep an eye on posts to this newsletter for more information.

 

 

 

 

Bob Edwards

Bob has been working with practices across the UK offering novel ways to improve cross-sales and increase new client acquisitions. He is also interested in "step changes" in legislation that offer challenges, and therefore opportunities, for practitioners to provide new recurring and one-off support services to clients.

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