The result is clear: the British people have voted to leave the European Union. What was theoretical has just become very real indeed. After the dust settles, what next? The good news in the immediate term is that for most of you, tax is unlikely to be top of your board’s list of priorities so you may have the luxury of a little breathing space. But that breathing space may not last long.
We predict that within the next few days it is very likely that you will be asked to communicate the tax impact of Brexit on your business. This will be long before there is any real clarity over post-EU tax policy or how we transition away from the European customs union. It means that you do need to think through the various scenarios for your business and be ready to explain the tax consequences to a wide range of stakeholders – and these tax consequences may be fairly complex and hard to pin down. You may also be called on to support your colleagues in those areas which are higher up the Brexit agenda – for example, HR and personal tax matters relating to immigration, and the treasury implications of volatile financial markets.
So what practical steps should you be taking over the coming days and weeks? We do now recommend that you take a step back and assess the (tax) impact on your business. Unless you have a very limited scope of operations in Europe, this may well result in quite a long and varied list. So the next step will be to try and quantify the potential exposure with a view to prioritising action, allocating responsibility and where necessary, requesting additional support and budget. This assessment may also throw up some very firm preferences for how Britain decides to exit from the EU, in which case, now is the time to lobby and put your case forward to the Government teams working on Brexit.
You may also be under pressure to commit to a decision which had been placed on hold in the run up to the referendum – perhaps an M&A transaction, a substantial investment or move into a new market, or a business restructuring. This decision may not be any easier now have the result of the referendum, so there may be some work to do in terms of reassessing the tax analysis of a transaction or articulating to the wider business what the risks of uncertainty are.
We can of course help you with an impact analysis, across the taxes and more widely. Indeed we’ve already discussed the issues in detail with a number of clients in the run up to the referendum. If you would like a conversation, please contact Tim Sarson, Sian Hill (for the Financial Services sector) or your usual KPMG contact.