There is a mood in the meeting rooms…A certain rustle amongst the FT’s as the CO’s sip their cappuccinos. An eerie silence that hasn’t been heard in quite some years…
We all talk about Brexit, because it distracts from the real fear.
The real fear amongst people who run businesses, small and large, here and from around their world. Here employing people and spending money escaping their own ludicrous business environment for one that makes a bit more sense.
People who (believe it or not) didn’t come for the food, weather, Brexit, traffic, slow and rather bizarre decision making…
No… they are here because they appreciate the various things that make this place attractive. They come for the flexible tax law for foreigners, a favourable business environment, English language, a low corporate tax rate, tax reliefs for investors and entrepreneurs…
And many rightly point that the ship is perhaps a little to the right. But what British business badly needs coming out of the Brexit rocks, certainly isn’t a mad socialist pirate at the helm of the HMS British Economy.
But is that right wing scaremongering, or should we all be worried? We all know something is wrong – the economy didn’t make sense in 2008, and it doesn’t make sense now. Our leaders weren’t great back then but they are worse now.
And on we trot, while the environment rots, mortgages are flying, people keep buying.
The London bars bubble like the last party on the titanic, champagne still flowing, medals still shiny, pride in all that is British still pumping through their veins, as “Rule Britannia” plays in the background…while the selector cues up “Anarchy in the UK”…
Theresa May’s only weapon, only reason she is still in power, her only redeeming feature, is the fact that her opposition is Jeremy Corbyn. Whatever keeps the wolf from the door – they say!
The way things have been going, let’s assume that wolf got through that door, down the road, round the corner and right up your trouser leg.
“Why?” you ask. “Is he really as bad as a snarling predator to business? Is a no deal Brexit really the end of the world?”
Let’s just assume the worse, no deal Brexit. That means, on the 29th March 2019:
- If you make or distribute toys, or cosmetics, or medical devices – or to be honest most things – in the EU and you are relying on a British company being the address to fulfil your labelling or legal requirements. You have a problem, as we are leaving the EU, and you need an address and responsible party in Europe.
- Do you sell goods from the UK to Europe? The EU is a customs union, you pick a port of entry, and then once in you can move goods about it. The UK is leaving… so you need a new port of entry into EU.
- Ports will be jammed, warehouses will be slammed. Achtung Brexit!
But Corbyn could be worse.
Corbyn plans on spending so much that we could be looking at capital controls in the UK with a run on the pound. Removing the highly helpful remittance basis to attract CEOs and CFOs to the UK, and hence their headquarters. Making you publish your tax return if you earn over £1m, scrapping Entrepreneur relief, a 10% tax rate for people who build and sell their own business. Putting corporation tax up to 30%, removing the two years employers have to decide if their employee is any good (trust me, it takes a lot longer than year), and much much more.
So, what should you do?
- If you sell goods get a VAT registration on the continent. Probably the Netherlands. Maybe Germany, maybe Belgium.
- If you are doing 1 because you have goods, you also need an EU company. Likely Ireland, Denmark or Portugal if you want it open it this year. Because, well, it’s complicated, but trust me on this. If we leave you will probably need one. Pick an easy place to get to and set up, and get the bank account functioning.
- If capital controls come in you will want ways to book your revenue physically outside of the UK. Or it won’t be leaving and you won’t be paying your bills. So, point 2 again – get an EU company.
- Get a European passport if you can, through spousal or ancestry reasons. A lot of countries require an EU citizen to form a company, but you might well find yourself needing to put your company where you have a person, possibly yourself with a right to live there.
- Gift more to your kids sooner rather than later. Advance your pass of wealth downwards.
- If you are from overseas and you rely on the remittance basis, get some advice.
- If you’re going to sell your company, it would be a good idea to sell before any rules change if you can. Entrepreneur relief is on the ropes.
- Declare dividends, take more money earlier out of your business. And maybe put it in some overseas bank accounts?
- Hope like hell that neither of these things happen.
Many see business as a big bad thing. In my experience businesses do care about their staff and the world – to the extent that it is sometimes detrimental to them. We’re good at business in the UK and should be proud of it, because it’s what keeps the lights on. And light is exactly what we need now in these dark times.