As the United Kingdom moves through Brexit and beyond, accounting professionals and other members of the financial industry in the country are faced with uncertainties.
What is Brexit?
In March 2017, the UK voted to leave the European Union (EU), which commentators have called the ‘Brexit’. The results of a referendum triggered a two-year process of leaving the EU which ends at 11 PM UK time on March 29, 2019.
As of April this year, the UK and EU have agreed on the provisions of three key issues, namely, how much the UK owes the EU, what happens to the land border between Ireland and Northern Island, and what Brexit consequences are to UK citizens residing in the EU and EU citizens living in the UK.
Brexit and the Accounting Profession
Given that there are as many as 693,000 people working at law firms and accountancy practices in the UK, it can be said that a sizeable fraction of the employment sector depends heavily on the financial services industry, which will undergo a considerable legal upheaval in the coming year.
As such, commentators express concern that the Brexit could diminish UK’s position as the region’s premier financial hub. Brexit could result in banks relocating jobs to other EU countries, which has already started.
But what do post-Brexit consequences actually mean for accounting professionals? Below are some of the predicted effects of Brexit on the accounting profession.
As the UK prepares for its withdrawal from the EU’s single market, businesses and entities in the UK will have to prepare for the impending changes in tax and regulation.
For public firms, this represents an opportunity in terms of serving more clients who will be needing advice on how to navigate the tumultuous months following the Brexit vote. Businesses will need expert advice on how to cope with the post-Brexit environment.
Existing EU company law legislation that impact accountants may undergo a considerable transformation in the next years. The following directives may be up for review:
- Directive 2013/34/EU on annual financial statements, consolidated financial statements, and related reports;
- Directive 2009/101/EC on the disclosure of company documents and company obligations;
- Directive 2012/30/EU on forming public limited liability companies, maintaining and altering their capital;
- Directive 89/666/EEC on disclosure requirements for foreign branches of companies; and
- Directive 2011/35/EU on mergers between public limited liability companies, among others
Should Britain leave the UK, there will likely be a significant impact on accounting jobs, given that there will be changes in laws surrounding employment in EU member states.
At present, accounting professionals from EU countries who want to work in other member states have to undergo top-up training to prepare them for their destination country. However, if the UK leaves, that wholesale recognition would be gone. As a result, British accountants may find it more difficult to qualify for practice in EU countries.
Ultimately, if your organisation or your client’s businesses will be affected by the UK’s withdrawal from the EU, you should continue to monitor the changes in tax laws and treaties between the UK, the EU, and other EU member states. What’s important is that we remain calm and keep an open mind as long as we do not know what is going to happen yet.
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