By Adam Price, VP Product Management, Compliance, Brexit and Migration
2019 is already proving itself to be yet another rollercoaster ride. With Making Tax Digital (MTD) and Brexit both coming up (one more concretely dated than the other), there’s a lot we need to prepare for. However, it feels like the implications of MTD are much clearer than they are for Brexit. With a Brexit deadline around the corner, whichever way MPs decide to vote, nobody knows the extent of the impact it could have on the running of our businesses.
What do businesses need to think about when it comes to Brexit’s impact on VAT? Will it have one? And how do they mitigate against any potential difficulties?
A withdrawal agreement vs a hard Brexit
In the draft withdrawal agreement originally negotiated back in November 2018, the EU and the Government negotiated a withdrawal period running to at least December 2020, during which, there will be virtually no changes to trade or tax for businesses. In this scenario, there would be no immediate change to UK VAT, customs duty or boarder control.
Nevertheless, businesses must be prepared for all eventualities in periods of uncertainty like this. For example, of late we have noticed larger retailers stockpiling goods to mitigate the effects of any potential blockages or delays that could occur in the event of a hard or no deal Brexit. Furthermore, manufacturers have been assessing the impact that border delays could have on the supply chain. Those manufacturers functioning on ‘just in time’ business models have had to reconsider the viability of this approach post-Brexit.
In the event of a no-deal, the VAT technical notice discusses the introduction of postponed VAT accounting. This will affect imports into UK from both the EU and further afield. This, coupled with MTD, will mean all businesses trading with the UK may need to update the software they use to create UK tax returns.
In any eventuality, the good news is that domestic VAT within the UK is likely to remain the same following Brexit. Therefore, for domestic business, there will likely be limited impact on VAT rates. However, whether we negotiate a deal or end up with a hard Brexit, one thing is for certain – the transfer of goods between the UK and EU and other neighbouring countries will change to some extent.
The impact of Deal vs No Deal Brexit on B2B goods
Currently, when vendors and customers are in different EU member states, but both are VAT registered, B2B supply of goods has VAT implications, yet no cash flow implications. B2B sales are usually invoiced by the supplier, registered for EU VAT at zero rate, and the VAT registered customer accounts for the purchase in their next VAT return as if it had been invoiced including VAT as if it were purchased locally (i.e. at local VAT rates). Any VAT due is then paid by the customer with their VAT return. This is referred to as the reverse charge mechanism.
If there is a withdrawal agreement, the reverse change mechanism will continue to apply, however if there is no withdrawal agreement then the UK will immediately fall outside of European VAT regulations. The UK will no longer be part of the EU, so normal export VAT rules will apply for suppliers (the most common scenario is goods are zero rated) and the customer will need to pay both customs duty (where applicable) and VAT at the time of import. This change would have a significant cash flow impact on B2B customers so to help mitigate this, the UK government has committed to postpone the payment of import VAT (this is known as Postponed VAT Accounting). In the event of a no-deal Brexit, businesses that are EU VAT registered, purchasing goods from UK will have to pay VAT when the goods pass through customs unless they are based in a country that already operates Postponed VAT Accounting, or is introducing it. For example, Ireland has recently committed to introduce Postponed VAT Accounting in the event of a Brexit no-deal.
The impact of Deal vs No Deal Brexit on B2B supply of services
At the moment, under the ‘place of supply’ rules, the VAT registered customer is responsible for accounting for VAT on a B2B purchase of services (reverse charge rules). This is not expected to change in either a deal or a no deal scenario.
The impact of Deal vs No Deal Brexit on postal and low-value goods
Parcels valued at £15 or less sent between the EU and the UK are currently not subject to VAT –known as Low Value Consignment Relief (LVCR). Irrespective of Brexit, after 29th March 2019, all UK parcels will be subject to VAT (except those exempts such as children’s clothing) and LVCR will be removed.
A digital service will be implemented, allowing businesses sending parcels to the UK from 30th march onwards valued £135 or less, to pay the VAT in advance. It’s possible to register for this service now. If a parcel is sent without the VAT paid by the sender, then the recipient will need to pay the VAT before they can collect their parcel.
If there is one thing we can be sure of, it is that Brexit is going to irrevocably change the business landscape as we know it. However, it is individual businesses’ responsibility to ensure that the impact of these changes, whichever way they go, are understood. By preparing and for example, investing in high-quality business management software, businesses are able to reduce the number of admin tasks they face in the long run – and gain a competitive edge from their ability to plan ahead for whatever the future may hold.
5 ways to keep your team connected with split working
By Sam Hill, Head of People and Culture at BizSpace
As the government switches its message back to “work from home” where possible, businesses face a challenge as their employees are split between locations, with bubbles in one place and individuals elsewhere.
Although technology has permitted teams to stay connected over the past few months, the return of some employees to the office presents a new challenge to leadership as they must ensure those who remain working from home are not left behind. As teams typically speak less frequently when working remotely, employers must ensure that their employees who are not yet in the office do not feel isolated and that the culture remains unchanged.
Employees have a need to feel valued and connected to other members of the firm, even when working remotely. To aid business leaders in ensuring they avoid ostracising colleagues at home, this article provides practical tips for employers on achieving an inclusive workplace while their employees engage in split working.
Maximise the use of technology
When part of the team has returned to the office, it can be easy to forget to include remote working employees in particular conversations which may happen in passing or casually during the day. For remote working employees, this can be a significant contributor to them feeling isolated or that they are unable to sufficiently complete their job at home.
To combat this, business leaders should ensure their teams continue to use technology to their advantage. To maintain the communication which can be lost with remote working, management should continue to host daily or weekly team meetings via video conferencing, where employees can catch up and share what they are working on. This will ensure all employees continue to build connections and celebrate their achievements.
Encourage team work wherever possible
When employees work separately in different locations, it can be easy for those away from the office to feel isolated and detached from their direct team. Despite this, business owners should encourage teamwork wherever possible to allow the group to solve issues together and meet targets in a more efficient and effective manner.
Employees working remotely can struggle to speak up when they are facing challenges since they cannot turn to a colleague as quickly to ask for advice. By encouraging team members to work together, this issue can be combated as employees build a natural relationship over time where they feel more comfortable reaching out to their peers, while the added benefit of being virtual ‘opens the door’ to new lines of communication between colleagues which may not have communicated face-to-face.
Reinforce the company culture
While employees are split between home and office work, it can be easy for the culture of the company to begin to slip. It is important for leaders to ensure they are proactive in nurturing and reinforcing the company culture, since healthy company cultures have a direct impact on the performance of teams.
Taking the time to reinforce the vision and values of the firm to employees will help to ensure the team is in touch with the wider goals of the organisation. Coupling this with the open communication of any news or updates relating to the company will allow for transparency, an important trait which ensures employees remain loyal to the company. Uncertainty is detrimental to the morale of a team, so any communication should be as clear and certain as possible.
Introduce lunch and learn talks
Lunch and learn sessions are a great way to ensure businesses are stimulating employee engagement and generating a positive team activity. They are typically less formal and can offer employees opportunities to deliver talks on a variety of topics which are directly or indirectly related to the business.
For employees working remotely, this is a perfect way to ensure they are still able to engage in training, with video and audio conferencing opening up the ability for remote workers to tune in wherever they are.
Don’t dismiss virtual social events
Although the use of zoom quizzes and calls quickly became tiresome for many employees during the national lockdown, the use of virtual social events should not be dismissed by businesses. For employees still working remotely, these social events are a direct replacement for the usual social events and informal drinks after work which they would have otherwise attended. Since employees who have returned to the office may be engaging in more social events in person, it is imperative for businesses to facilitate a space for remote working employees to socialise.
Social events are an easy way to create natural conversation opportunities and bring employees together on a far more personal level. They also contribute to the success of the firm by boosting the morale of employees, leading to higher productivity and satisfaction in teams. This, in turn, can boost the company culture as employees feel a higher sense of loyalty to the organisation, even from their remote locations.
The new virtual leaders – adapting your leadership style for a changed workforce
By Debbie Clifford, Head of People and Talent at Olive
During this pandemic, organisations across all sectors have witnessed a dramatic change in workplace structure, and as such have had to undergo huge changes themselves to adapt and pivot to the needs of their organisations and new, remote workforces.
With many finance organisations continuing in the main to operate remotely or operating a hybrid office model, senior leaders in finance have been required to adapt their leadership approach, shifting from the traditional ‘boardroom culture’ to a more approachable and inclusive management style.
The key characteristics of the new virtual leader
Prior to the pandemic, leadership, in general, was starting to move towards a more open and trusting relationship between leaders and teams. Yet there hadn’t quite been the evolution towards a more emotionally intelligent and involved leader.
While challenges or issues relating to staff were easier to pick up on in the office; previously, managers could take cues from certain behaviours and attitudes witnessed during the working day. Now, that’s almost impossible, and leaders are having to invest more of their time in people management, which presents both a challenge and an opportunity.
The shift in emphasis on the management of people will continue to grow in the remote workplace. Yet leaders have to accommodate this while still having to meet their own ongoing commercial and operational targets. It’s tough, but ultimately the more you invest your time in your people the more likely you and your team will succeed. Managing true performance, giving feedback regularly, interacting, and ensuring regular check-ins will stand you in good stead to achieve your goals with the support of an engaged team.
Build Trust. Communicate.
With everyone working from different locations, it’s hugely important to instil trust in your people and become more output focused. There are various performance tools that can help you to achieve that, such as goal setting (using your HR system or Performance platform), ticketing systems such as JIRA or CSAT data that comes back from Voice of Customer surveys, as examples. It’s also equally important to have open and honest conversations with your people about how the world of work has changed. The changing nature of our day to day work may mean that your team may feel that they are being questioned more, possibly even micromanaged – due to the increase in internal meetings and catch up’s. It’s really important to communicate the reason for this, due to less ‘in person’ interaction.
Employees not used to home working have found themselves without the face to face guidance they are used to, thus the reciprocal trust between team member and manager becomes even more important to hone, alongside measuring productivity and output of work. Also remember that everyone will be struggling at times and many are suffering from the shift to permanent home working. Microsoft reported how the move to homeworking has impacted the global workforce. People are working longer hours, starting and finishing later, are overworked and stressed.
As a leader, and an emotionally intelligent one, it’s important to be mindful of the effect of home working and that there’s no separation between work and home anymore.
Trust is one of the most important traits you want to cultivate and build in your team, being authentic, open and honest will take you to performance you never thought you could achieve. Your behaviour as a trusting leader will enable you to drive performance and loyalty from your team that will exceed all expectations. It is key to driving empowerment, accountability and ultimately, productivity.
The importance of HR
Look to your HR team for more guidance, as the disciplines of HR have and will continue to change during this time. Previously, HR in the main was the recruitment arm for the business or for discipline or exit purposes. Now HR is central to driving team engagement and development.
This period, viewed positively, should allow for your employees to have more capacity to bring on their personal development (no long commute for example) and many will be actively seeking this. See it as an opportunity, as in turn it will be valuable to your organisation. HR is key to fostering team environment and collaboration; Encourage your HR team to drive an engaging personal development programme for your employees to make them feel valued and valuable.
Appraisals will also need to change and be more agile. What you set today as a performance goal could easily change tomorrow due to the current market dynamics. By focusing on people, the more time efficient you become, and the more interactions you have, the more you get buy in. Your team will understand more about your objectives and intent and feel more bought into the overall vision and goal.
Get involved and show recognition
Be visible on the team internal and external socials. Break the barrier. Work has changed so much that we’ve all had to change. Prior to Covid some leaders and senior management may have felt that being visible on the company social channels may not have been appropriate. This is not the case now. And it doesn’t have to be all about company business. Make it personal and be human.
Thank and show your team that you have noticed them. Find somewhere where you can share recognition, such as the company Teams channels or intranet which are great for peer to peer feedback and help keep people engaged in the company activity. Reward good effort with the offer of a few hours off or send some flowers. It will make your employees day and show them they are valued. Small gestures of kindness go a long way in this virtual working world.
Create a management and development pathway
Shared learning is a great way to engage the senior team members as part of a learning and development pathway that cascades through the business. Examples of this include small bitesize pieces of learning, such as packaged business leadership content, a TED talk, white paper or video that senior leaders can absorb, and coach to their managers, which in turn then cascades through to employees.
Done on a regular basis, this practice helps your finance firm move your management teams forward. It’s a structured way of learning and sharing with a consistency of language and approach – with everyone seeing and learning the same things.
The importance of self-discipline
It’s never been more important for leader’s to not burnout and be a positive role model to the organisation.
Be disciplined – don’t be ‘always on’ and responsive all the time. Be aware that leading by example will have a positive impact on your organisation. Think about what works best for you as a leader and make time to move away and have some space – your team will respect this and follow your lead.
It’s important to remember and acknowledge that we are all learning all of the time – and that often we don’t have all the answers. Showing a level of vulnerability, humility and honesty to your team will go a long way towards connecting with them in a deeper and meaningful way, and more than ‘being the boss’ and getting tasks done. High performance is gained because of the way you trust and believe in people, not because of your status in the hierarchy.
Ultimately, successful leaders are ones who create their culture, who are liked and respected by employees. Post pandemic the new workplace could and should be a much better place, with much better leadership. If we don’t use this time as a catalyst for change, we’ve potentially missed an opportunity to make something bad something much, much better.
Thinking Long-Term When Your Shareholders Won’t Let You
By MaryLee Sachs, US CEO, Brandpie
In a recent study of nearly 700 CEOs across the US and Europe, my team at Brandpie uncovered that 76% of chief executives think corporations need to shift focus from short-term profit delivery to long-term value creation.
So why have less than 5% actually made that shift?
Uncertainty about the future, and how to navigate increasing pressure from shareholders to survive the present moment can make the shift from short-term profit to long-term value feel like a pipe dream. And that makes sense, even more now than it did when we administered the survey before the COVID-19 pandemic had taken root.
But even amidst the most uncertain period of history in many of our lifetimes, and certainly the most uncertain business landscape, the transition is possible. If they can be bold enough, those CEOs who have identified the need to shift toward long-term value can join that 5% of leaders who have already taken the leap.
All they need is purpose.
But I’m not talking about surface-level mission statements or even commitments to meeting ESG requirements.
CEOs that are ready to successfully pursue long-term value creation need something much deeper: a north star that guides businesses from the inside out. A purpose that primes them, through long-term considerations, to respond quickly and effectively to short-term concerns to benefit share and stakeholders – including staff and brand audience – across the board.
A north star
The most common barrier to leaders looking to make a long-term impact is uncertainty, and the world is increasingly rife with it.
Businesses must find a way to offer some sense of security, to shareholders and stakeholders – and purpose is the path to that security.
Organizations that have orientated themselves around a north star internally and externally are better able to address, respond to, and pivot in the face of unexpected events and the endless changing market landscape.
Take a company like BlackRock – whose CEO Larry Fink has been a long-time advocate of purpose, calling it “the animating force” for achieving profit. When I spoke to Frank Cooper, BlackRock’s Senior Managing Director and Global CMO in a webinar this summer, he reiterated the organization’s dedication to their guiding purpose, and discussed how it helped them adapt to support their employees and their stakeholders when COVID-19 threatened financial security around the world.
“In the past six months, the COVID-19 crisis, alongside racial justice movements, have drastically changed the ways people expect corporations and corporate leaders to act,” said Cooper. Initially BlackRock prioritized a humanitarian response for the short term – focusing on guaranteeing as much security for their employees, customers, and shareholders as possible. But as part of a purpose-driven leadership team, Frank knew that short-term reactionary methods wouldn’t be enough.
“If you only play defense,” he said, “You will not end up winning. You have to play defense and offence.” And purpose is the game plan that allows you to do that.
BlackRock’s Fink was also one of 181 CEOs to sign a statement from the Business Roundtable last year, which redefined the purpose of corporations in light of changing business landscapes and an increased focus on stakeholders. The statement also expresses a commitment to prioritizing long-term value to the benefit of shareholders, serving as a reminder that long-term value creation and pleasing shareholders is not remotely mutually exclusive.
That Business Roundtable statement generated a lot of buzz about the rise of stakeholder capitalism, and for good reason. Increasingly, stakeholders are playing a more powerful role in the success of businesses than ever before. And that’s as it should be. Afterall, a company’s worth is only as good as the end service it delivers to meet customers’ needs, and when it comes to employees, they’re the best ambassadors for the business.
Both of these demographics are looking for long-term relationships, security, and to succeed in the long-term, businesses have to find a way to offer that now, or risk losing hold of customers and employees that are crucial to their success in the present moment.
Another rising trend that represents a blurring of the lines between share and stakeholder interests is a new wave of shareholder activism. Rather than advocating for strictly profit driven-changes, firms like Trian Partners and Blue Harbour are investing in order to steer companies towards higher ESG standards, reflecting a more purposeful approach to doing business with not just the future of a company, but the future of the world in mind.
Pivoting with purpose
As the COVID-19 crisis continues to throw uncertainty after uncertainty in the face of leaders fighting to keep business as usual as it can possibly be, purpose has proven to be a life-saving tool. It’s allowed many organizations to pivot authentically and smoothly to meet unprecedented internal and external needs.
To survive in any context, businesses constantly need to react to changing conversations to meet stakeholder needs, but the pandemic certainly underscores just how effectively a purpose can ferry organizations through short-term change toward more permanent and relevant adjustments. These uncertain times have also challenged businesses to recognize that purpose incorporates more than just something to stand for, but a way of acting, and focussing on service and fulfilment of need.
In the early days of the pandemic, companies like BrewDog, Ford, and Virgin Orbit stood out for their swift and apparently seamless transition to providing hand sanitizer, PPE, and respirators. Purpose played no uncertain part in these agile short-term pivots – by knowing who they are at a core level, and how their specific expertise positions them to respond to the evolving needs of their customers, they were able to quickly adapt to new, entirely unexpected needs for the greater good. They were driven by clear purpose internally that allowed for authentic outward change.
Playing the long game
True purpose is achieved through constant maintenance and centering – moving forward purpose must become part of corporate hygiene. The current state of business – and the world at large – demands that shareholders get on board with the value of that.
None of us have a crystal ball to determine what will happen. When you think about all the different things affecting the market – a pandemic, Black Lives Matter, equality, ESG – it’s hard to imagine how to prepare your business for any number of continually unexpected factors, while also priming it to last.
But a deeply-rooted purpose addresses both of these problems. By determining the long-term value your company can offer and implementing that internally, you create a resilient operation that knows what it stands for, how it operates, and is prepared to nimbly shift in the face of adversity.
No new normal will ever last, but businesses with a strong sense of internal self and clear, purposeful organization can.
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