Brexit risk for small businesses

Making Tax Digital - risks for small businesses

According to the Association of Chartered Certified Accountants (ACCA), SMEs (Small and Medium-sized Enterprises) are facing considerable risks in the near future, in the event of a no-deal Brexit. This looks likely to clash with HMRC’s introduction of Making Tax Digital (MTD). The government needs to provide detailed guidelines – now.

Currently, EU companies can obtain VAT refunds from other member states via a single-market process. If 29 March of this year, Britain tumbles out of the EU without a deal, this process might well come to a sudden and chaotic end.

ACCA has highlighted how certain EU member states, who, post-Brexit, would be identified as ‘third countries’, might decline to refund VAT to UK companies. Furthermore, following a no-deal Brexit, where the UK is characterised as a ‘third country’, UK businesses would be forced to amend their IT systems. This would further complicate their VAT systems and processes.

The association predicts that this added complication to the process of VAT submission would conflict with Making Tax Digital, HMRC’s new online tax system. This is due to be launched on April 1st – a mere three days after Brexit.

ACCA is keen to highlight the potential dangers of this scenario and the chaos that could ensue. They are demanding that HMRC gives far more clear guidance than shown in their latest advice, published back in August 2018. They are calling for precise plans to cover every possible impact on VAT processing, following a no-deal Brexit.

ACCA’s Head of Taxation, Chas Roy-Chowdhury, declared, ‘This issue is of considerable concern for SMEs, with many businesses reviewing how they will adhere to a new digital system MTD in April.

‘A scenario whereby just three days prior to that, the UK might crash out of the European Union, with all the impacts that could have for those trading with the bloc would present unnecessary challenges for businesses.

‘We are stating that the government must be specific with the various outcomes of a no-deal and provide detailed scenario planning guidelines for businesses to follow.’

The House of Lords Economic Committee has added its voice of concern. They recently urged the government to avoid adding to the confusion, by putting back the launch of MTD by twelve months.

We’re bookkeeping and accountancy specialists who understand the concerns that businesses have over Brexit. Are you worried about its impact on your business? Are you concerned about the introduction of Making Tax Digital? For advice on this and a wide range of tax, payroll, accounting, finance and trade matters, get in touch.

We’re here to help.

Disclaimer

This legal information is not the same as legal advice and you may not rely on our post as a recommendation of any particular legal understanding. Please, consult an attorney if you’d like to get advice on your interpretation of this article.

Leave a Reply

how can we help you?

For a fast, effective, friendly & affordable bookkeeping and accountancy service –
get in touch.

We’re here to help

This website or its third-party tools use cookies, which are necessary for its functioning and required to achieve the purposes illustrated in the cookie policy. If you want to learn more or withdraw your consent to all or some of the cookies, please refer to the cookie policy. You accept the use of cookies by closing or dismissing this banner, by scrolling this page, by clicking a link or button or by continuing to browse otherwise.