Brexit Accounting: Here’s What You Need to Know Now

The UK is leaving the EU single market and customs union at the end of the transition period on the 1^st of January 2021.

Brexit will have implications for all UK businesses who trade with companies outside of the UK no matter if they are within the EU or outside the EU. That envelopes all US and international companies.

Brexit will also impact on how many businesses currently use their finance software.

Due to the ongoing nature of the Government negotiations, it is tough for finance software vendors to commit to firm updates until final decisions have been made.

Whilst it is likely that changes to standard software will be deployed swiftly following the final decision, there are many changes that can be made now in preparation.

All businesses will be affected in different ways depending on the countries they trade with, volumes produced and what products they’re handling, alongside other factors. The official Government Transition site is a great resource to see how the changes will affect you specifically and what you need to do.

What can you do now?

With regard to system changes, as a result of Brexit, there are several things that it is likely you will need to do. Some example of these are listed below:

• The commodity code and country of origin fields will need to be populated in your stock module.
• EORI number (Economic Operators Registration and Identification number) will likely need to be added to all customers and suppliers.
• Document Layouts will need to be amended to allow for all of the above as well as specific information required for Irish exports.

What do I need to consider on January 1st?

Due to the nature of the change, there are some tasks that you simply will not be able to do prior to January 1st. The following tasks could, potentially, be required within Sales and Purchase ledger but also within Sales and Purchase order processing for live orders (including part shipped/received transactions).

• Customer and Supplier default VAT codes will need to be updated
• On open Sales Orders, the VAT code will need to be amended for any lines that have yet to be fully despatched
• On open Purchase Orders, the VAT code will need to be amended for any lines that have yet to be fully received

As previously stated, The Brexit process is very much a fluid situation and there may be more requirements and considerations which emerge prior to or post the 1st January date.

If you would like to discuss your specific requirements in more detail or would like to book a Smith Cooper consultant to make your VAT changes in the new year, do not hesitate to contact us via the website form, sage@smithcooper.co.uk or 01332 587515