Your Accounting Guide to Brexit
With the recent Brexit vote in June, there remains much uncertainty over the long-term effects it might have on different industries, as well as global economies as a whole. Because this is the first time in history that a country has decided to leave the European Union, companies worldwide are now cautiously venturing into murky territory.
Beyond tracking the pound each day and keeping an ear out for updates on Brexit on the news, it is also crucial to analyze which factors may potentially have the biggest impact on specific industries such as accounting, and understand what type of actions to take moving forward.
One factor that could majorly impact accountants is any change in tax legislation as a result of Brexit. The UK will need to change its tax policies as it will no longer adopt those of the European Union. Most significantly, the country will no longer have to adhere to the standard of a minimum 15% VAT rate and 5% reduced rate. Depending on how much the UK’s new policies will deviate from the existing ones, these changes would impact not only tax accountants but also those in accounting departments of both domestic and multinational businesses dealing with the UK.
Looking ahead, global capital markets are slowing down and changes in supply chain operations could create disruptions in business between US and British companies. In order to smoothly adapt to these longer term changes, accountants should keep a close eye on both their clients and competitors based in Europe and the UK. This way, while any potential impact of Brexit on American companies may not be obvious, it will be easier to create and revise business plans that factor in Brexit’s repercussions.