If this month’s referendum results in a ‘Yes’ vote, many businesses in England and Scotland will become accidental exporters, writes Rebecca Burn-Callander, Enterprise Editor at the Daily Telegraph.
In an article published by her on 8 September, she outlines a few ways to protect your business from the changes using tips from David Nicholls, alliance manager at UKForex.
Paraphrasing his tips:
- The British Government has insisted that Scotland will not be able to use the pound in the case of independence: If you’re an English business with customers on the other side of the border, consider opening a bank account in Scotland and collecting some of your revenues there. If a Yes vote leaves Scotland with a separate currency, you may have created a natural hedge, with cash balances on both sides of the border.
- If Scotland cannot use the pound, there is an immediate question mark over what currency will be used instead: Forward contracts may be a good tool for countering the risk. You may need to talk to a specialist about agreeing these types of arrangements.
- Businesses will rightly be concerned about what will happen to their customers in Scotland or England: Importers as well as exporters will be exposed to greater cost and uncertainty. This could lead to importers switching suppliers to someone on their side of the border to reduce uncertainty.
- Businesses on both sides of the border will have to go through more complex VAT reclaim process than pre-Independence: At worst, a prolonged accession to the EU could mean UK and Scottish businesses cannot reclaim VAT on the cost of goods and services.
But are there other tax and business considerations that spring to mind? For example (ignoring any taxes that would become payable in Scotland under their new administration):
- Would Scottish-based taxpayers be treated as having left the UK and thus be exempt from UK capital gains on the sale of assets in the UK?
- How would genuine tax deferral schemes work for Scottish residents who previously lived in England?
- Will there be tax advantages in taking up Scottish citizenship?
- Which English laws will have to be rewritten to exclude Scottish references?
What else?
Can you think of any situations of a financial, tax or legal nature that requires clarification?
Why not comment below with your points and I’ll see if Rebecca Burn-Callander will run a follow-up article in the Daily Telegraph?
Managing Director at One Smart Place
Martin Pollins is a Chartered Accountant and MBA with wide experience in corporate finance and business management. He has served on the boards of several companies, including those listed on the London Stock Exchange, AIM and OFEX. He is Chairman and Founder of OneSmartPlace and was a Council member of the Institute of Chartered Accountants in England and Wales from 1988 to 1996. He was managing partner of PRB Martin Pollins, based in Sussex, the first Accountancy firm to advertise on British television.He went on to create and launch the CharterGroup Partnership (the UK’s first Accountancy network) and then LawGroup UK (at the time, one of the largest networks of lawyers in the UK). In recent years, he helped to raise several £millions to fund British films such as The Da Vinci Code, Bridge of San Luis Rey, Head in the Clouds and Merchant of Venice with actors such as Charlize Theron, Robert De Niro, Al Pacino, F. Murray Abraham. Kathy Bates, Gabriel Byrne, Geraldine Chaplin, Tom Hanks, Ian McKellen, Audrey Tautou, Penélope Cruz, Steven Berkoff, Lynn Collins, Jeremy Irons, Joseph Fiennes and many more.
He has written over 700 business publications (see Glossaries at https://onesmartplace.com/resources/glossaries/) and is editor of Better Business Focus (see https://onesmartplace.com/resources/better-business-focus-magazine). His Blog, on a wide range of subjects can be found at: https://onesmartplace.com/blog/
He has written over 700 business publications (see Glossaries at https://onesmartplace.com/resources/glossaries/) and is editor of Better Business Focus (see https://onesmartplace.com/resources/better-business-focus-magazine). His Blog, on a wide range of subjects can be found at: https://onesmartplace.com/blog/
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