Tag Archives: Brexit

The Tax Implications Of Brexit

shutterstock_122108053Setting aside the initial shock of the Brexit vote and the ensuing political instability, which shows no sign of settling down any time soon, one key area for businesses and individuals as we progress towards our exit from the EU is understanding what the tax implications will be.

There has been talk of an emergency Budget as a change in leadership could entail a new Chancellor, who will have their own idea of what needs to be done in the wake of Brexit, but this is unlikely to happen until the Autumn. George Osborne has already highlighted corporation tax cuts down to 15% as a possible carrot to incentivise international firms to do business in the UK. The Autumn Statement this year may be an even more important event than usual.

One immediate impact may lie with the long-awaited ‘Making Tax Digital’ discussions, which have experienced practical difficulties and may well be put on hold until a new Cabinet is appointed. The current Finance Bill is already running behind schedule and in the current political climate it could mean that the Finance Act, due to be passed in October, may be delayed.

In the longer term, the changes could be wide ranging. At present, UK companies benefit from the ability to pay and receive dividends, royalties and interest tax efficiently between companies in different EU countries. It remains to be seen whether participation in this will be possible post Brexit. This plus the possible imposition of trade tariffs may have significant consequences for the UK’s attractiveness as a base for inward investment as a footstep into European markets.

The tax which could change most significantly is VAT. VAT is an EU wide tax governed by EU law. Post Brexit, the UK will have the flexibility to amend and develop its own VAT law, without the current EU constraints, which could be positive. On the downside, the current cross EU reporting and refund mechanisms may no longer be accessible, potentially creating more of a compliance burden for UK companies trading in Europe.

At present it is too early to start to plan with any certainty. It’s going to be a case of watch this space as events unfold over the next few months.

If you would like advice or are concerned about any aspects of your affairs, don’t hesitate to get in touch with our expert tax team on 01254 679131.

BREXIT – An Opportunity To Plan

shutterstock_439389007It is impossible to avoid the endless debate and commentary on what the future holds for the UK following last week’s vote. Businesses will undoubtedly be affected but SME owners should use this opportunity to review their plans for the future and consider the options they have available to them. Those with growth plans should not put these on hold but ensure they have made themselves aware of any issues that leaving the EU may give rise to.

Having spoken to a number of banks, the fear they have is that businesses will not want to take on additional borrowings for the foreseeable future. This seems absurd when they are keen to lend. Businesses should keep in regular contact with their bank and discuss their plans with them. They will more often than not be supportive.

The availability of debt presents an excellent opportunity to those business owners who are planning to sell in the next few years. This may have been originally based upon a sale to a third party. However, the current uncertainty will probably lead to a reduction in the number of potential trade buyers and will have an impact on the multiples buyers are willing to pay. A Management Buy Out (MBO) could be the obvious answer.

There will be a number of businesses that have a management team in place, that given the opportunity to undertake a MBO, will jump at the chance. The message to the owners of these businesses is start talking to the management team NOW!

For those businesses that do not have the necessary management structure for a MBO, the current economic climate gives them time to plan and put the required team in place. This requires careful consideration and the requisite advice should be obtained as part of this process.

Therefore, business owners who want an exit in the short to mid-term, should seriously consider if an MBO is an option. If it is, then speak to your bank or your adviser. I have been involved in a significant number of MBOs and PM+M Corporate Finance are currently advising on a number of MBOs. Therefore if you want to pick our brains on the subject, please feel free to give us a call.

Tim Mills – Corporate Finance Partner 
Jim Akrill – Corporate Finance Partner 

Don’t panic! A brief message to PM+M Wealth Management clients following the Brexit announcement

Whatever your views on this morning’s result, it has predictably led to some uncertainty and the one thing markets don’t like is uncertainty.  As I write the FTSE is trading at 6,190 having opened the day at 6,350 and having recovered from a low of 5,806 early this morning.  So we can expect some volatility in the short term!

You should bear in mind the following points:

  1. Our investment process involves regular portfolio reviews face to face.  Probably the most important issue we cover at a review meeting is to assess how much cash to hold on deposit and how much to invest.  We encourage our clients to hold sufficient cash on hand to ride out any storms.  It means you can sleep comfortably at times like this because you don’t have to sell when the markets are down.
  2. Not all your portfolio is held on the stock markets and we help you make sure you don’t have all your eggs in one basket.
  3. Sharp falls in markets can happen as a result of economic news or political crises.  The biggest gains can also can be just as unpredictable and often clustered together.  For this reason we recommend sitting tight during times of turbulence.  Missing the best gains can seriously affect your long term returns.

We’ll keep you posted on our views on regular basis over the next few weeks and months.   In the meantime, if you have any concerns please don’t hesitate to contact one of the team.

Tony Brierley – Managing Director, PM+M Wealth Management

PM+M Wealth Management is authorised and regulated by the Financial Conduct Authority.  

PM+M Managing Partner Jane Parry Reacts to Brexit

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Following this morning’s result, we are now in uncharted territory and likely to see continuing instability across the economy and political arena for some time to come.

For North West businesses who desperately need the confidence and certainty to be able to plan ahead, that isn’t likely to be in place any time soon.  Businesses who rely on export markets who will see the short term benefit of the fall in sterling but at the cost of long term instability and uncertainty. Conversely, businesses who rely on imports will see immediate pressure on prices coupled with longer term uncertainty.  However, the effect is likely to be felt across the whole business community and wider economy.

The immediate priority for businesses is to understand what they can do to give comfort and confidence to investors and funders and to start to put a plan in place to navigate the business through the next 2 years.

For private investors and those who rely on investment income, the immediate advice has to be to sit tight and not make any immediate decisions.  Get some advice once the initial post result turbulence has settled down and then start to make some informed decisions.

To quote the wartime poster, we have to just keep calm and carry on.

If you have any questions or concerns, please pick up the phone and give the team a call on 01254 679131.

What Does Lancashire & The North Need To Do If The UK Votes Leave?

shutterstock_374884033There is vast noise surrounding this referendum and most people with opinions seem very certain of the right thing to do.  I am far from convinced that enough thought has been given to what we (business and public leaders in Lancashire and the North) actually do on 24 June if the British people vote to Leave.

On announcement of a vote to leave, the Westminster village will ferociously navel gaze as politicians squabble and plot to decide on the new Prime Minister and Cabinet.

Meanwhile enormous decisions will be needed on key areas for real people where policy has in effect been agreed with the EU for decades – especially:

–          Agriculture
–          Fishing
–          State Aid
–          VAT classifications
–          International trade
–          Movement of labour

We have no idea what the party elected into government (or indeed any other political party) would actually want to do in these areas following a Leave vote.

We can expect that the Scottish Parliament, the Welsh Assembly, the London Mayor and the government in Northern Ireland will immediately be putting teams together to lobby intensively to look after the interests of their constituents.

It is probably worth looking at the two of these issues where there has at least been a volume of commentary in the referendum discussions: international trade and movement of labour.

We know that there will be acute uncertainty on international trade until the terms of our new relationship with Europe have been agreed.  Many commercial supply agreements run for several years and uncertainty over how they will be regulated will not help Northern exporters at all.

The civil servants in the trade team in London will have to agree not only trading terms with the EU but reach replacement agreements with every country we currently have a deal with through the EU.  This will be a new experience for almost all of them and risks being very time and resource pressured.  It is a very challenging idea that this group of bureaucrats in this situation are going to agree deals that are balanced, fair, look properly after the interests of the whole country and in total better than the existing agreements.

On the topic of movement of labour it is worth noting that from a business perspective skills shortages are the leading restriction on business success.  Changes in the movement and availability of labour could have very significant impacts on business.  There are two credible (and completely contradictory) suggestions on how migration will change after the referendum: – either there will be a rush of new EU migrants seeking to take advantage of the opportunity to work in the UK before the rules may change and they may be barred; or existing working migrants within the UK will immediately start looking to leave so that they can establish themselves with a job somewhere with a degree of security.

Either of these is likely to be bad for Britain, with the second in particular likely to be worse for Lancashire as it is would deepen the skills shortage and likely lead to a greater flow of talent from here to the initially higher paying economy in London.

In addition to the huge new areas where we need political leadership following a leave vote, there will be great new challenges on the Treasury.  The disruption caused by leaving the EU is almost certain to slow growth in the short term, placing additional pressure on the deficit.  There is also an additional gamble on the availability of funders for the deficit at our historically low interest rates with the additional uncertainty of leaving the EU.  While George Osborne has missed every target he has set himself since he became Chancellor, it is far from clear that a new head of the Treasury would be able to deal with these problems more effectively, especially with an unclear political mandate.

In summary, the changes which will come from a Leave vote will give vast power into the hands of London civil servants and policy makers.  We in Lancashire and the North will need to commit a lot of time and resources and be at the top of our game to make sure that the decisions that are made are fair to us and not just for London politicians.  Leaders of all opinions, backgrounds and parties will need to work together immediately to make sure the North of England gets the deal it deserves.

David Gorton – Senior Partner