In recent months we have been delighted to continue to help a number of UK businesses across various industries who approached us to assist them in dealing with the harsh realities Brexit has brought them. Below are three separate case studies of how we have helped.
Brexit Case Study 1: UK Based Food Processing Business Supplying High-Quality Goods to High Street Retailers.
We provided assistance, including commercial and tax planning advice to a UK food manufacturer, who recently established a subsidiary company in Ireland. This enabled that company to continue trading with its EU customers in a straight forward and frictionless way. The Irish subsidiary company now handles all of the EU export business which had previously been operated by the UK parent company prior to Brexit on the 31st
As of January 2021, the manufacturer of goods for export to the EU was transferred to an outsourced food production facility in Ireland. A significant increase in jobs is now anticipated at that food processing facility because of this. This restructuring of the trading activities of the British company has helped to ensure that their existing EU market was held intact.
The company believes that the Irish-based subsidiary, as an EU business entity in its own right, will enable the continued growth of the group's EU market. They strongly contend that future sales growth in Europe will be easier to achieve in this way, rather than through its UK-based marketing activities alone.
The advice and guidance we were able to provide our new client, played a significant role in helping this UK company to evolve in a manner that enabled it to avoid the difficulties presented by Brexit.
Brexit Case Study 2: UK Based Fashion Exporter Supplying High Street Fashion Retails In Ireland and in Europe
Up to recently, a UK wholesaler of high-end fashion clothing sourced all of their clothing products from outside the EU. Following Brexit, a difficulty arose regarding import duties because the country of origin of the goods is China. On this basis, import duty is applied on the export of such fashion goods from the UK company to its existing EU customers.
The company found itself in a very difficult situation as it would have been forced to absorb the additional duty as part of its costs, giving rise to a significant reduction in the profit margin of the EU sales.
In order to overcome this issue, the UK company established a subsidiary company in Ireland which instead, from February 2021, imports the goods from China into Ireland and in turn exports them to the existing EU customer base.
We were very pleased to provide assistance to this client in terms of the commercial and taxation issues relating to the restructuring of the UK company's activities following the negative impact of Brexit.
Brexit Case Study 3: UK-based Supplier of Machinery Parts and Equipment to Municipal Entities in Europe.
A UK-based equipment and parts supply company derived a high proportion of its revenues from its European customer base. The goods it supplied were all sourced from within the EU as well. Prior to Brexit, the company was in a position to avail of Triangulation for VAT purposes, this is a simplified VAT mechanism available to EU member states where all three EU businesses involved in a transaction are VAT registered.
Following Brexit, the UK company failed to qualify for the benefits of triangulation, giving rise to significant VAT difficulties.
We were very pleased to of been of assistance to the company by providing them advice that allowed them to circumvent the problems they were faced with.
If you would like to explore further options around your business, please contact Peter Roberts or Tomas O’Leary who would be very pleased to assist you.