THE Brexit process has been marred by uncertainty and it still remains unclear what our future relationship with the EU, our biggest trading partner, will be.
By Steve McCrindle, a VAT expert at Haines Watts, looks at things business owners should consider through the transition.
The current transition period is due to end on 31st December, 2020. However, Michael Gove, the Chancellor of the Duchy of Lancaster, revealed in the House of Commons this week that just 24 % of businesses believe they are fully ready for the end of the Brexit transition period. Nearly double – 43% – think the transition period will be extended. The Government however has informed the European Commission that the UK will neither accept or seek an extension to this.
Whether a deal is agreed or we exit on World Trade Organisation terms, it’s clear there will be consequences when it comes to VAT, border control and Customs duty, which, in most cases, will be immediate. This will impact all businesses that trade with the EU.
With only a few months left until the transition ends, businesses need to plan and prepare for all outcomes. While the devil will be in the detail when it comes to the changes, these are some areas that need to be considered.
Supplies of Goods and services and value added tax (VAT)
The movement of goods between Great Britain (GB) (not the UK) and the EU is set to change substantially from January 1, 2021. I use GB because if the Northern Ireland Protocol is executed it will mean Northern Ireland will be treated differently to the rest of the UK. Therefore, it is vital that business owners that trade with Northern Ireland are aware of the consequences post-Brexit.
Exports and imports will replace EU dispatches and acquisitions. Zero-rating for the export of goods will still exist if the relevant conditions are met. As things stand, any goods that are imported are liable for import VAT and potentially Customs duty.
Postponed VAT Accounting for Imports to be introduced
To help lessen this impact, HMRC is going to scrap the current physical charging of import VAT and instead, import VAT will be accounted for by adjustments on VAT returns under a new process called postponed VAT accounting (PVA).
PVA is an automatic process that can help minimise cash outflow for business owners. It will apply to all imports, both from the EU and countries outside the EU. Although there may be different regulations and a process for goods arriving into the UK where the value doesn’t exceed £135.
Status-quo for VAT on services
To avoid double or no taxation, the UK looks set to continue to apply VAT place-of-supply rules in line with the EU VAT Directives, with few changes to the VAT treatment of services envisaged.
What does all this mean for businesses? Well, as examples, business owners will need to think about the business’ liability to be registered for VAT within the EU or alternatively, if they can deregister within the EU. This will be especially important for businesses that provide electronically supplied services to consumers in the EU and also suppliers of goods in GB/UK to non-VAT registered customers in the EU.
New Border Controls
The UK Government confirmed in February that the Brexit transitional arrangements were no longer required and that full Customs controls will be implemented for goods coming into the UK from the EU from January, 1, 2021. However, mainly due to the impact of the Coronavirus crisis, the new requirements will now be introduced in three phases between January and July next year. The Government has also issued a new UK import and export guide to border controls.
During the first phase, businesses importing standard goods will have up to six months to complete Customs declarations. Once the declaration is submitted, any duty will then be due on the goods and the new UK global tariffs (UKGT) will apply. Of course, there will still be checks on controlled goods such as tobacco and alcohol.
From April, the second phase will commence. All imports of products of animal origin, whether that’s meat, honey, milk, egg products or pet food, will need pre-notification and health documentation. This also includes plants and plant products too.
The third phase will kick in from July and any business moving goods will need to make declarations at the point of importation. Customs duty will then be due at this time.
Goods moving between EU Member States are not currently subject to Customs duty and this will remain for UK-EU trade until December 31, 2020. It will only change from January 1, 2021. Businesses will need to plan for Customs duty compliance and also for any financial impact this additional cost will have.
All businesses will need to review their supply chain to ensure they comply with the VAT, border control and Customs duty consequences and requirements post January 1, 2021 and this should be done as soon as possible. Business owners need to prepare for both the administrative and financial impacts – on their businesses over the next few months.
Adoption of tech in private markets lags behind industry trends
- Nine out of ten financial institutions have accelerated their digitisation strategy as a result of Covid-19.
- Yet just 26% of financial institutions say that technology currently plays a core role in delivering private markets services.
- Firms say that private markets technology will have the greatest impact on operational efficiency, regulatory governance and client experience.
Wealth managers must urgently increase their use of technology in offering private market investments or they risk being left behind by their competitors in less than five years.
The latest research report, ‘Digitising Private Markets’, from leading fintech firm Delio, shows that financial institutions’ adoption of digital tools across their operations has increased substantially as a result of Covid-19 this year. But many firms have been slow to accelerate their use of technology to deliver private markets services, despite recognising the improvements it could make to back-office organisation and regulatory compliance, not to mention enhancing client services. Delaying adoption of a digital strategy could leave firms trailing behind competitors within five years, according to Delio CEO and co-founder Gareth Lewis.
Gareth Lewis said: “Any firm that is serious about providing a complete wealth management service to their clients, needs to deliver a holistic private markets solution. Technology will be fundamental to the delivery of these services and needs to be implemented across the board sooner rather than later. Firms that fail to act quickly face losing ground and potential new clients to more tech-savvy competitors.
“While I understand that client relationships are still vital in this area, companies can’t become complacent. We live in a more instantly-connected world and customers – especially new clients who are more likely to have been entrepreneurial as they generated their wealth – want more digital access to their finances than ever before. It’s time to take an omnichannel approach that combines the best elements of technology and personal advice; this will deliver a market-leading approach.”
Providing clients with access to private markets has been a challenge for many financial institutions, due to the difficulties in scaling a part of their business that is operationally complex to deliver, requires strict regulatory governance and has traditionally been driven by personal relationships between client and adviser. It is one of the reasons many institutions only started to develop a private markets solution in the last 12-18 months.
However, better use of technology can help firms to deal with each of these hurdles more efficiently, providing access to a market that has consistently outperformed publicly listed investments over the last decade. McKinsey’s most recent Private Markets Review highlighted that the value of private assets under management had grown by $4tn or 170% in the last ten years, compared to 100% growth in global public assets over the same period.
The difficulties presented by the international lockdowns associated with Covid-19 has meant that 86% of firms report that they have accelerated their digital adoption this year, with 70% making quicker decisions on technology projects specifically.
Yet, a significant minority of organisations believe that digitisation will not necessarily play a prominent role as we begin to adapt to the ‘next normal’. More than a third of firms (35%) believe that they will still rely on traditional client engagement strategies in the short to medium term.
Having developed private markets solutions for more than 70 international institutions over the last five years, Delio firmly believes that technology can add significant value at both an organisational and client level.
Gareth Lewis added: “Client relationships will still be at the forefront of any wealth management proposition, there is no question about that. However, I also believe that technology can enhance how advisers build relationships with their clients. If I had an investment opportunity that I wanted to pitch to 50 clients, why wouldn’t I want to share that information digitally beforehand to gauge their appetite? Failing to accept that busy clients want to be able to access data at any time, no matter where they are, is a potentially damaging mistake that could cost slow-moving companies dearly.”
Covid-19 disruption drives five new retail supply chain trends
The business disruption caused by COVID-19 has resulted in four out of five (82%) retailers changing their approach to stock management and is driving five retail supply chain trends.
This is according to a new report from logistics company Advanced Supply Chain Group (ASCG), which shows how the pandemic has caused stock management issues for 92% of retailers. The impact of this is leading to an evolution of the long-practiced lean management process Just in Time (JIT) and 42% of retailers planning to grow sales by selling through more channels.
The report, Retail Supply Chains in the ‘New Normal’, is based on the findings from interviews with 200 senior retail professionals involved in buying, stock inventory management and supply chain management. It reveals five retail supply chain trends including:
1) Time for Change
To address delays caused by COVID-19, retailers have adapted timings at the beginning and end of their supply chains. Of the retailers which have made changes to supply chain strategies, 41% have allowed longer leads times on stock ordered, while four in ten (40%) have extended delivery times provided to customers.
2) Localising Stock
COVID-19 disruption led to two thirds (66%) of retailers receiving stock late, whilst a similar number (63%) experienced shortages in the availability of goods. This is seeing retailers prioritise investment in stock availability (57%), which includes building more localised levels of stock to minimise the risk of out of stock scenarios.
This shift in behaviour has the potential to completely change Just in Time (JIT). Only a quarter (25%) of retailers believe JIT has some form of feasibility while the pandemic remains ongoing.
Claire Webb, managing director at ASCG, has more than 13 years’ experience working in retail leadership roles. She comments: “Just in Time will have to change because it’s less able to cope with increasing unpredictability – it quickly becomes ‘just out of time’. Supply chains will evolve as retailers aim to better mobilise stock, keeping it more agile to sweat its value across multiple routes to market.”
3) Real Time Visibility
The research shows retailers rank balancing stock flow versus stock piling as the biggest supply chain challenge following the pandemic. They want to avoid not being able to satisfy customer demand because of unavailable stock, but equally don’t want to tie-up too much capital in stock at risk of depreciation.
To address this challenge, 40% of retailers are investing in improving the accuracy of inventory management, whilst a third (33%) pinpointed smart, connected technology that improves the accuracy and visibility of stock as the most effective method of strengthening supply chain resilience. Changing stock inventory management to make stock movement and levels more visible was also a high-ranking priority for 37% of retailers.
4) Stock Optimisation
The ongoing economic uncertainty and unpredictable customer demand caused by COVID-19 are seeing retailers hone-in on the performance of the goods they’re selling. 41% of retailers are investing in auditing their stock to improve profitability. These pandemic-driven stock reviews have also resulted in a third (33%) of retailers diversifying the stock they sell, with the same amount also changing strategies to better focus on stocking and selling their highest margin goods.
5) Diligence Against Disruption
In response to the impact of COVID-19, a third (33%) of retailers are developing contingencies to protect against supply chain disruption. This involves tactics such as increasing the number of suppliers they source goods from, working with a larger number of logistics providers to spread risk and also increasing overall stock levels.
Claire Webb concludes: “Each of the trends emerging from the impacts of COVID-19 share a common theme of tackling margin dilution. Retailers and logistics partners have spent years optimising supply chains to remove unnecessary costs that cannibalise margins. This is now being turbo-charged as retailers aim to extract maximum value from each hard-fought sale and to build loyalty in increasingly uncertain and price-sensitive markets.
“Smart, connected technologies and bespoke supply chain software systems will be critical for retailers adapting to COVID-19. This can prove the difference in effectively managing stock movement and levels to avoid availability issues and costly stock depreciation and obsolescence.”
Click here to read more about the five trends and download the full report ‘Retail Supply Chains in the ‘New Normal’; Evolving from Disruption to Delivering Excellence’.
Full link to the report; https://www.advancedsupplychain.com/latest/white-paper-retail-supply-chains-in-the-new-normal/
Remote leadership anxieties
It’s a difficult time to be navigating the complex world of business. Whilst adapting to new ways of working remotely, a practice which looks to become the new norm, professionals at all levels of business are experiencing new challenges.
Whether workers are going for a promotion, trying to keeping up team morale or fire-fighting a never-ending to do list, times are hard and without being able to interact with colleagues face to face, simple tasks can suddenly become complex. Even those in more senior positions are needing to find new ways of working, to effectively manage and nurture not only their teams but also themselves.
A recent report by RADA Business, Beating Workplace Performance Anxiety, revealed that, contrary to what many may believe, anxiety is actually most prominent amongst those at senior director level, with 94% of professionals struggling with anxiety around communicating. This group were also found to suffer feelings of anxiety the most – 10 times per month – which is twice the national average.
However, the world-renowned performance coaches at RADA Business, the commercial subsidiary of the Royal Academy of Dramatic Art, build upon actor training techniques, centred around body, breath and voice, to help business professionals develop the necessary skills to improve their performance in the workplace.
To help senior business professionals navigate the anxiety-inducing world of remote leadership, Kate Montague, RADA Business tutor shares her answers to some of the more common questions, which have been put to the RADA Business team since the lockdown began, by senior leaders.
I’m finding remote working stressful, how can I manage this stress more effectively?
As leaders, we have to accept that there will be times when things become stressful and Covid-19 certainly hasn’t been an exception to this. Acknowledging that we are out of alignment with our working habits currently and seeking the tools and techniques to help is the first step.
At RADA Business we look at where stress is manifesting itself and it often extends beyond the psychological and takes a physical form in the spine and showing up in our posture. Taking a stretch, rolling out the shoulders and releasing the neck is a healthful activity between calls.
Conscious breathing also helps to make us more comfortable physically, and also calms the nervous system. Take a moment to sit or stand tall, then become aware of your breath and breathe deeply and fully a few times a day. This is a useful tool for reducing stress and helps to clear the mind. Deep breathing in this way releases dopamine, the body’s ‘happy’ hormone, which helps to make us feel better, more emotionally responsive and less emotionally reactive. If you’re stressed focus on lengthening the out-breath, or if you’re tired and need recharging, focus on taking a few fuller in-breaths.
I’m struggling to land my messages through virtual mediums, how can I show up effectively online?
There is definitely a knack to presenting effectively via virtual mediums, and getting it right will certainly help you convey both confidence and professionalism.
Firstly, consider your posture: make sure you’re sitting tall, lengthening through the spine. Think of your pelvis as a foundation stone to your spine, let it relax into the base of the chair.
Ground yourself with your feet flat on the floor – this will help you to connect your breath to your speech so you’re able to communicate with depth of tone and clarity.
When using visual platforms, consider your framing to ensure your head is nicely centred, balanced on your shoulders, and neither too close nor too far from the camera. Lighting is also hugely important on video calls – we need to be well lit from the front so those we’re presenting to are able to read those all-important expressions, which are key to communication. If you have a tendency to rush, remember to take moments to pause and breathe. Using eye contact to connect with your listeners will help slow down your communication so others have more time to process and absorb what you have to say.
Temperamental video conferencing software and poor Wi-Fi connections can cause some technical problems through online mediums. Be sure to check in with your audience and have them feedback by asking some simple probing questions such as “Is everything clear up to this point?”, or field any questions they may have. This will ensure your message has been received and has landed as you intended.
How can I reassure my team while I’m struggling with my own anxieties?
Firstly, acknowledge your own challenges. Bosses often face burnout when they refuse to admit they’re struggling, however when you are willing to look after yourself first you’re in a far better position to help and reassure others. Take time each day to tune in and listen to yourself as you would a friend and provide your own coaching. Ask yourself: “How am I doing?”, consider the answer and apply to yourself the response you might give a friend if they were to say: “I’m feeling anxious, stressed, burnt out…”. Give space to connect with your kindness and empathy. Acknowledge where you’re doing a good job, and make space for your inner guidance to show you where to go next in terms of a difficult decision or action. We all feel anxious at times, so let those feelings come forward, remember to breathe, and address them in the moment so they are processed, which will help you to reconnect with your innate clarity and intuition.
When reassuring your team, whether they’re feeling angry, anxious or upset let them bring their own feelings forward too, rather than suppress them – they’ll respond to this. In body-led psychotherapy we say all feelings are welcome: it’s a non-shaming, non-judging atmosphere. Schedule in 10 minutes each week to check in with the team and ask them how they are coping, what they need, or how things could be better. Inclusion has never been so important so allow your team to vent, or share what is current for them, and show that you see them.
My progression feels stinted, how can I impress my superiors when they can’t see and hear me at work?
Make yourself visible by being proactive. It’s easy to feel as though we’re doing lots of work and not getting noticed, especially when working remotely, but having clear intentions and going out of your way to make them visible will help you to be seen. Don’t let the boss do homework, instead offer them what you have to share – send them something to watch or read; offer to lead a meeting; offer to head up a new project – serve it to them on a plate. Be sure to ask for guidance and feedback too, as this will help to keep the conversation going and ensure you are front of their mind. Put yourself out there and let yourself be visible.
How do I keep up team morale while we are short staffed?
Being short staffed is never easy but the relationship you have with your team is everything. Rapport and intimacy become even more important when a team is downsized, so regular check-ins are essential. It’s important to ensure that your team’s workload is relatively balanced in order to prevent exhaustion and burnout. Schedule regular catch-ups with the team to oversee their work but be careful not to micro-manage – teams are more responsive when they’re able to work to their own deadlines, whilst still meeting your needs of course. Also bear in mind that the warmth of giving praise helps to re-engage teams who may be under pressure or missing colleagues who are no longer around. We thrive on celebrating the wins, so be sure to factor in time to thank the team, perhaps at the start of an update meeting or why not setup a quick ‘digital round table’ with the pure intention of praising the team? Be sure to take your time when delivering praise and make eye contact with your team – this will give your message a clear sense of genuineness.
I’m trying to move into a new role but now isn’t a good time and I feel stuck, how can I get noticed?
If it really isn’t the time then focus your energies on a new temporary goal that you’re able to get passionate about in the interim and that will allow you to grow in other ways. You may find that taking time to acquire new skills in other areas will have an impact on your routine performance and there are plenty of ways to skill up. Make time for a short-term course, undertake a side project, engage in continued professional development (CPD) – anything to keep your mind active and to keep you growing whilst your usual routine is feeling static. Developing a new project or hobby that you can talk passionately about often comes with a new sense of confidence and enthusiasm, two traits that are bound to help get you noticed by the people at the top.
During these challenging past few months, business leaders have seen just how resilient they can be. In the face of adversity, there’s now potentially a deeper awareness of how performance at work is impacted by how well we nurture the holistic self – the spirit, mindset, physical and emotional well-being all play a part in how we deliver. There has been an acknowledgement of strengths while simultaneously more willingness to acknowledge vulnerability. This really is key as it leads to deeper human connections, which is the bottom line of any business. Regardless of what trade we’re in, it’s all about human endeavour and although stressful for many, the recent months have helped us to learn about balance and to become more attuned to what we as individuals need, as well as how to be more responsive to our colleagues and clients.
Adoption of tech in private markets lags behind industry trends
Nine out of ten financial institutions have accelerated their digitisation strategy as a result of Covid-19. Yet just 26% of...
Covid-19 disruption drives five new retail supply chain trends
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Remote leadership anxieties
It’s a difficult time to be navigating the complex world of business. Whilst adapting to new ways of working remotely,...
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