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?
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?
He was a Council member of the Institute of Chartered Accountants in England and Wales from 1988 to 1996.
Martin Pollins ran his own firm based in Sussex and was the first Accountancy firm in the UK to advertise on television and Martin went on to create and launch the CharterGroup Partnership (the UK's first Accountancy network) and then LawGroup UK (one of the largest networks of lawyers in the country).
Martin started work on the Bizezia concept in 1996, developing the broad range of information resources and products over the past 18 years.
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