when it comes to accounting, are you and your business ready for brexit?
Right now, no one really knows if we’ll leave the EU on October 31st or not.
We’re in unprecedented times politically and it’s causing a great deal of uncertainty.
After speaking to many of our clients, we know a lot of businesses simply don’t know what they need to do to prepare.
Or if they need to prepare at all!
The frustrating thing for many is a lack of clear direction and sadly, until it happens (or doesn’t), in truth there’s not much you can actually do.
Still, we’ve been studying the potential changes and when it comes to the taxes you administer and your accounts, there are some things you can take note of now.
changing standards, eventually
First off, if we do leave on the 31st, according to the official guidance offered by GOV.UK, companies would be required to prepare annual accounts using UK adopted International Accounting Standards (IAS) rather than EU adopted IAS.
For now, this shouldn’t be a big deal for you or your accountant to deal with.
How come?
Well, on the day after Brexit itself…
The standards will essentially be the same. They’re in line as we speak and there are no immediate plans to change.
However, if the UK does begin to change things after that, you or your accountant will need to keep up to date with any variances.
But it is good to at least know this change will only come into effect for accounts being submitted for financial years beginning AFTER we exit the EU.
VAT might be a problem, as usual
Aside from the change in the adopted standards you’ll need to follow, the biggest change could be in how VAT is handled.
This could especially be the case if we leave on a no deal basis.
The official guidance from the government says it aims to keep VAT as similar as possible for the time being. But it does concede in the event of a no deal, it will be necessary to change how some VAT accounting is done.
It will mainly affect how you account for VAT on goods and services imported and exported from and to the EU.
Essentially, any items imported or exported from the EU would need to be accounted for in the same way any goods from non-EU countries are handled.
The guidance suggests companies would be able to account for VAT on imported goods on their VAT return, rather than paying when they arrive in the UK.
This would be the case for non-EU goods too.
As for when it comes to dealing with VAT on exports, it will be different too.
According to GOV.UK:
“…distance selling arrangements will no longer apply to UK businesses and UK businesses will be able to zero rate sales of goods to EU consumers.”
This means the EU will treat any goods arriving into the EU as they would any goods arriving from non-EU countries.
Although many companies exporting to the EU keep a record of the items as evidence of the export, this will be particularly important if we leave the EU, as it will be a requirement to retain proof the goods left the UK.
As well as these key changes, there will be some technical changes that happen too…
But we understand all of this can sound a little complicated and until it happens (if it does at all) it’s difficult to get your head around.
The good news is:
That’s what we’re here for.
Here at Appleleaf Accountancy we’re already digging deep into the potential changes so we can best advise our clients and make sure they’re sorted if we exit in October.
If there’s something specific you’re worried about in regards to your accounts and our potential exit from the EU, don’t hesitate to get in touch and we can do our best to put your mind at rest.
Or – if you’ve been doing your own accounts until now, but you’re worried these changes might mean you need to get someone in to sort them for you – we’d be happy to chat and see if we can help.
To get in touch, just give us a call Monday to Friday on 01472 287387 or get in touch via our contact form here
It’s a strange time for all businesses right now.
And we know only too well how difficult the uncertainty can be.
But here at Appleleaf Accountancy we’ll do our best to make sure Brexit doesn’t bother your accounts process too much.
