With Brexit potentially presenting UK-based businesses with yet more upheaval on top of the COVID-19 pandemic, leaving the EU has implications for accountants and the advice they give their clients.

The UK has left the EU. Trade is as it was before. But that’s only because of the transition period, which we now know won’t be extended beyond 31 December. There is still much to be done and plenty of advice that practitioners can offer clients – and that hinges on some knowledge that advisers already have.

Britain is leaving the single market, customs union and VAT area. These are all changes that will have an impact on the way companies in the UK will trade with their counterparts on the continent. However, the unknown continues to be the degree to which it will be different to the existing transition period.

Though the trade negotiations will settle the issue of tariffs, coming out of the customs union means the introduction of customs administration. Clients will have to ensure customs processes are in place.

This means familiarising themselves with terms such as rules of origin, valuations and classifications and registering for an Economic Operators Registration and Identification number. It may come as a shock, but it will be a necessary part of the post-Brexit world.

For those moving perishable goods, having these measures in place will be critical. If a single operator fails to have the right paperwork at the border, it could mean disruption. If the errors are multiplied, it could trigger the kind of tailbacks and delays at ports that many have warned about.

“You simply won’t be able to move your goods across the UK-EU border without these processes in place,” says Adam Jackson, Director of Public Affairs and Brexit Advisory at Grant Thornton.

Tariffs present their own uncertainties. Under temporary arrangements published last year for a no-deal Brexit, 87% of goods coming into the UK would be tariff-free. Of the remaining 13%, tariffs on some categories could be significant – motor vehicles are a particular case in point. However, resolution of a trade deal during the transition period is likely to include agreement on tariffs for UK-EU trade.

Clients also need to be warned that coming out of the EU VAT area presents its own challenges. Currently, claiming back VAT from member states is a relatively easy, automated process.

Coming out of the EU could mean using the same process that UK businesses use for goods from countries outside the EU, possibly with longer delays for the recovery of VAT. That said, the trade negotiations could produce a new model that would provide a smoother VAT recovery process. What’s important is for the practitioner to work through the possible developments for clients.

“We don’t know the outcome of these current negotiations – it could be a good trade deal, it might be a bad one – or whether we might revert to World Trade Organization terms,” says James Pitt, a Partner at chartered accountants James Cowper Kreston. “There are lots of possible outcomes. Business owners need to be aware of what the potential scenarios might look like.”

For further resources on Brexit, visit here.