Ministers Humphreys and Breen publish third B&A survey on Irish SMEs views on Brexit from Department of Business, Enterprise and Innovation
Ministers Humphreys and Breen welcome increase in numbers of businesses preparing for Brexit and urge others to start planning
- Survey finds that more than 2 in 5 businesses strongly impacted by Brexit have a plan in place – almost twice as many as this time last year
- Notwithstanding the uncertainty that comes with Brexit, Ministers urge impacted businesses without a plan to urgently put one in place Dublin, Ireland, September 25th
- The Minister for Business, Enterprise and Innovation, Heather Humphreys TD and the Minister for Trade, Employment, Business, EU Digital Single Market and Data Protection, Pat Breen TD, today welcomed survey findings that show 44% of businesses that are strongly impacted by Brexit have a plan in place, and urged those without a plan to urgently put one in place. With a sample size of 546 SMEs, the survey is the third in a series on the impact of Brexit on small business owners, carried out by Behaviour & Attitudes on behalf of the Department of Business, Enterprise and Innovation.
The results follow recent surveys of clients of Enterprise Ireland and Bord Bia, which show that 85% of Enterprise Ireland clients have taken Brexit actions and 74% of Bord Bia clients have made progress in preparing for Brexit.
Welcoming the survey findings Minister Humphreys said: “This latest survey shows a marked increase in the number of impacted businesses preparing for change, which is both encouraging and welcome. With six months to go to Brexit, many businesses are taking the first important steps of gathering information and developing contingency plans. Many others are already taking actions with their suppliers and customers to build resilience, whatever the outcome of Brexit negotiations.
“Without a doubt, the figures are going in the right direction but we need to see an acceleration in contingency planning in the coming months. Notwithstanding the uncertainty that comes with Brexit, it is crucial that affected businesses without a plan urgently put one in place. The Government is negotiating for the best but preparing for the worst, and I would urge businesses to do the same.”
28% of all businesses surveyed report having a Brexit plan in place – an increase compared to the previous survey in September 2017 when the figure stood at 16%. This 28% figure increases for those businesses where the impact is the greatest: 41% of medium sized businesses; 39% for businesses with imports or exports from the UK; 44% for those businesses who say they are most impacted (up from 17% in the previous survey). 56% of SMEs are responding that Brexit is not impacting on their business, compared 48% in the last survey.
Brexit awareness is also on the rise. 42% of those surveyed have engaged with some form of Brexit information resources. This includes engaging with their business representative bodies, attending a Brexit roadshow or information session or availing of Brexit supports provided by State bodies. 13% have taken some mitigating action to address their Brexit challenges, which includes changing the source of raw materials and market diversification.
Minister Breen highlighted the wide range of supports on offer through the Government to help businesses with their contingency planning:
“We know the UK’s decision to leave the EU from March 2019 will entail changes to our trading arrangements and may entail new regulatory and other compliance requirements for importers and exporters in particular. Government Departments, enterprise agencies and regulatory bodies all have dedicated resources available to help business identify the key risk areas for business and on the practical preparatory actions that can be taken over the coming months.”
Minister Humphreys added: “My message to businesses is this: the Government is here to help. My Department’s agencies continue to provide much-needed financial support and guidance to businesses as they grapple with the effects of Brexit. In March this year, I also launched the €300m Brexit Loan Scheme with Minister Creed, the SBCI, the EIB, the EIF and the European Commission to provide affordable working capital to eligible businesses impacted by Brexit. We are now working on developing an Investment Loan Scheme, which would offer long term loans to businesses to help them strategically invest in a post-Brexit environment.”
Please see the DBEI website for the range of Brexit supports available to businesses.
The survey is the third in a series on the impact of Brexit on SMEs, carried out by Behaviour & Attitudes on behalf of the Department of Business, Enterprise and Innovation. This third survey was carried out in June 2018.
- Brexit – Views of Irish SMEs Survey Findings No. 3
- Brexit – Views of Irish SMEs Survey Findings No. 2
- Brexit – Views of Irish SMEs Survey Findings No. 1
Murray Cloney & Associates Limited is delighted to announce and greatly welcomes the proposed roll out of SIRO’s €60 million fibre broadband project to several cork towns, which we are delighted to say, includes our own Charleville. We were pleased to attend the launch of this €60 million project by Mr. Sean Atkinson, CEO, SIRO, at this morning’s breakfast event held in the Clayton Hotel Cork. Officially announced by An Tánaiste and Minister for Foreign Affairs and Trade Simon Coveney TD, we noted Charleville’s position on SIRO’s proposed timeline as the third town on their proposed timeline for roll out of super broadband connectivity which will be so important for the future development of the town. This news, coming days after the first meeting of the town’s socio-economic development plan is we believe, a game changer. In a chat to us after the event, Vodafone’s CEO Anne O Leary said that we only have to look to the town of Skibbereen to see the very real impact of the arrival of impressive broadband speeds and connectivity to business and the public alike.
So bring it on ….as soon as possible! The full press release is now available here
An Tánaiste launches SIRO plan to make Cork the Broadband Capital of Ireland
- SIRO announces €60 million investment to make Ireland’s fastest broadband available to over 75,000 homes and businesses in Cork city and towns
- Cork City (including Little Island and Ballincollig) joined by Midleton, Carrigtwohill, Blarney, Tower and Charleville as new “Gigabit Towns”
- Huawei appointed as build partner for Cork city (65,000 homes and businesses) with TLI Group appointed to oversee rollout services in five new Cork towns (10,000 premises)
- Overall SIRO network to reach 85,000 in County Cork.
17th September 2018 – An Tánaiste and Minister for Foreign Affairs and Trade Simon Coveney TD has launched a new SIRO plan to provide Cork city with the best access to the most powerful broadband services in Ireland compared to other cities in the country. It marks the first time that SIRO Gigabit broadband will be built in a city of the scale of Cork, with over 65,000 homes and business premises targeted.
Building on the successful deployment of SIRO in the Cork towns of Carrigaline, Skibbereen and Mallow, SIRO’s Cork footprint will expand to include a further 10,000 premises in five new towns – Carrigtwohill, Midleton, Blarney, Tower and Charleville. SIRO has built a network of over 185,000 premises in 40 towns around Ireland and Cork (totalling 85,000 premises) will be the largest single SIRO investment, with the €60 million construction plans announced today bringing the wholesale broadband operator’s total spend in the county to €70 million.
SIRO has appointed Huawei as its build partner for the Cork city rollout marking the latest in a series of partnerships between the two companies. Huawei is providing end-to-end network equipment for phase one of SIRO’s rollout to 50 regional towns and is currently SIRO’s build partner in Athlone. The two companies also collaborated to run a successful trial of XGS-PON technology on SIRO’s 100% fibre network, which achieved speeds of 10 Gigabits per second.
The TLI Group, which has already worked with SIRO on its Carrigaline rollout, has also been appointed to deliver Gigabit connectivity to five new towns added to the wholesale broadband operator’s construction plans. Carrigtwohill, Midleton, Blarney, Tower and Charleville will now also gain access to SIRO’s Fibre-to-the-Building technology, which is recognised as the gold standard for broadband connectivity internationally and is 100% fibre-optic, with no copper at any point to slow it down.
Commenting on the announcement, An Tánaiste and Minister for Foreign Affairs and Trade Simon Coveney TD said: “Gigabit connectivity will have a transformative effect on Cork city as Fibre-to-the-Building is recognised as the gold standard for broadband internationally. As a result, this will give Cork businesses a head start against their peers both at home and internationally, as well as giving homes access to the latest innovative digital services. This substantial investment by SIRO is another sign of how Government has encouraged investment by the private sector to boost our broadband capability. Cork stands to benefit substantially as highlighted by 10 other towns in the county all forming part of SIRO’s rollout.”
Sean Atkinson, CEO of SIRO, added: “While Cork is traditionally seen as the second capital of Ireland, today’s announcement will firmly establish it as the broadband capital of Ireland. Our Gigabit connectivity will complement Cork’s rich technology heritage and put it on a par with international cities like Hong Kong and Tokyo. Cork city is ideally placed to leverage this with in excess of one million square foot of office space due to come on-stream over the next year, with rental prices less than half the price of equivalent space in Dublin on average; a 23% lower cost of living; and a talented workforce with half of the Cork population under 35 years of age. SIRO is proud to help power a digital transformation in the city, as well as the five new towns revealed today, benefiting residents and businesses alike.”
Eric Yang, President of the Vodafone Account at Huawei, also said: “Huawei is delighted to be delivering SIRO’s 100% fibre-optic broadband to Cork City, designing and building a network that will future proof Cork City’s broadband requirements for generations.”
Speaking at the launch, Cork Chamber President Bill O’Connell added: “Given the strong growth of sectors such as global financial services, fintech, ICT, SaaS and cyber security in Cork, it is absolutely essential that business is supported by the best quality connectivity. We have the lowest latency transatlantic connection in Europe, new connections to mainland Europe in planning and now the local connectivity to match. It builds further resilience for an economy increasingly driven by data.”
SIRO is a joint venture of ESB and Vodafone which is investing €450 million in building Ireland’s first 100% Fibre-to-the-Building broadband network. Using the existing ESB network, SIRO delivers fibre optic cables all the way to the building. This technology, known as Fibre-to-the-Building, has no copper connections at any point to slow down the network and delivers 1 Gigabit speeds. For context, downloading a high definition (HD) film of 4 GB (Gigabytes) with a 10 Mbps connection takes an hour – with SIRO it takes 30 seconds.
The wholesale broadband operator’s network is now live in 30 towns across the country, with 10 retailers offering connections to over 185,000 homes and businesses. SIRO is offered on an open-access basis to all telecoms retailers in Ireland. SIRO has formed partnerships with 10 operators – Vodafone, Digiweb, Sky, BT, Carnsore Broadband, Rocket Broadband, Kerry Broadband, eNet, Airwire and WestNet – with more retailers expected to come on board as the company drives competition in the wholesale broadband market.
And the winner is……
Jeremy Cape and Dickie Chan of Squire Patton Boggs discuss the proposed VAT rules which will apply if the UK leaves the EU on 29 March 2019, without a deal on trade or other laws and regulations.
HMRC has published guidance entitled VAT for businesses if there’s no Brexit deal. This guidance is at pains to point out that a scenario of the UK leaving the EU without an agreement “remains unlikely”.
We still await more clarity on the government’s desired position on VAT if there is a deal. If, as expected, the UK leaves the EU VAT area under a negotiated deal, it may not be dissimilar to the no-deal position.
The UK as a third country Little in the guidance should come as a major surprise. Much of the guidance simply states the consequences for any country of being outside the EU VAT area.
The government has said that in the event of a no-deal Brexit it will introduce “postponed accounting for import VAT”. In the words of the guidance: “this means that UK VAT-registered businesses importing goods to the UK will be able to account for import VAT on their VAT return, rather than paying import VAT on or soon after the time that the goods arrive at the UK border”. Many had predicted that this would happen, partly to minimise the need for infrastructure at the Irish and French borders.
All imports affected What fewer predicted is that the government would go further and apply postponed accounting for all imports, not just those from the EU27 member states.
As Sir Humphrey would have said: “this is a courageous decision”.
The government is saying that traditional import VAT (ie collecting VAT at the point the goods enter the VAT area) is not necessary in a VAT system. There are issues in respect of the increased opportunity for fraudulent behaviour. For example, how does the border agent check that the VAT registration number is valid?
Why postponed accounting? It may be that the government feels constrained by WTO rules from differentiating between the EU27 member states and the rest of the world in applying postponed accounting. It’s not certain that this would be the case.
The government’s overall position on postponed accounting may well not be driven by a desire to avoid traders having to fund import VAT on goods purchased from the EU27 (although it has gone down well in the business community), but a belated realisation that VAT is capable of gumming up the borders to an unacceptable degree. Postponed accounting doesn’t get rid of a VAT border, but does soften it.
Parcels subject to VAT In the event of no deal, the government is also abolishing Low Value Consignment Relief (LVCR), not just for imports from the EU27, but worldwide. This means that goods entering the UK as parcels sent by overseas businesses will be liable for VAT, unless the items shipped are already exempt or zero rated.
The guidance explains that: “for parcels valued up to and including £135, a technology-based solution will allow VAT to be collected from the overseas business selling the goods into the UK. Overseas businesses will charge VAT at the point of purchase and will be expected to register with an HM Revenue & Customs (HMRC) digital service and account for VAT due.”
Other commentators have already noted wryly that “technology-based solutions”, particularly those not backed up by detail, are not renowned for their ease of implementation. Even if such a solution exists, there may be challenges in getting overseas businesses to register for UK VAT, understand UK VAT, charge UK VAT or even regard it as constitutional in their home country. What if such a business, having charged VAT, does not then pay it over to HMRC?
EC sales lists UK businesses selling goods would not need to complete EC sales lists, but they will need to retain evidence to prove that goods have left the UK.
The guidance reminds us that: “UK businesses should check the relevant import VAT rules in the EU Member State concerned.” Essentially whatever the UK does, the EU27 is likely to treat imports from the UK in the same way as from any other third country.
Finance sector In theory, a no-deal Brexit could lead to enhanced VAT recovery by certain financial institutions. The guidance says “For UK businesses supplying insurance and financial services, if the UK leaves the EU without an agreement, input VAT deduction rules for financial services supplied to the EU may be changed. We will update businesses with more information in due course” It appears that a change in the law would be forthcoming.
There is no suggestion that this will change where the bank’s customer is based outside the UK or EU27. This is a different approach to elsewhere in the guidance, where changes are generally to apply to all countries other than the UK.
VAT MOSS There is also a reminder for digital businesses to register for the VAT MOSS non-Union scheme in an EU Member State after the date the UK leaves the EU.
No more TOMS The government will be working with the travel industry to minimise the impact of the disappearance in the UK of the EU Tour Operators’ Margin Scheme.
Irish border The Irish border is currently invisible. It has no barriers as required by the Good Friday Agreement, (also known as the Belfast Agreement). But once the UK leaves the EU, the Northern Irish border will form the edge of the EU area.
The guidance says “The UK would stand ready to engage constructively to meet our commitments and act in the best interests of the people of Northern Ireland, recognising the very significant challenges that the lack of a UK-EU legal agreement would pose in this unique and highly sensitive context”. The government still appears to be grasping for a solution to what continues to be a seemingly insurmountable problem.
Conclusion In a no-deal scenario, the UK will unilaterally make changes to its VAT system so that businesses do not have to fund import VAT, which is likely to cause increased fraud, and we are still clueless about how VAT will work on the Irish border.
Seven months to go!
European Union VAT article by Jeremy Cape
Jeremy Cape is a tax and public policy partner in the London office of Squire Patton Boggs, advising on a wide range of issues, including M&A, private equity, finance, restructuring and insolvency, and VAT. He is a member of the legal advisory panel of the Red Tape Initiative, which will identify the most important, least controversial opportunities for cutting red tape in a post-Brexit world. He can be followed on twitter @jeremydcape.
Very Interesting article in the Independent.ie re what may or may not be haooening to your private emails…did I say ‘private’..is there such a thing online now?
Murray Cloney & Associates Ltd are delighted to acknowledge yesterday’s publication of the DBEI report on the requirement to address the skills needs arising from the potential trade implications of Brexit. In particular we note recommendations we now quote below, some of which we put forward with cross-industry colleagues at the Cork workshop in Februrary. Its rewarding to see regional SME voices represented at national level in this important report published ahead of Brexit and the challenges it may hold for many of our cients. The full report may be downloaded from the DBEI website at; https://dbei.gov.ie/en/Publications/Publication-files/Skills-needs-potential-trade-implications-Brexit.pdf
Overarching recommendations Recommendation 1 Launch an intensified industry awareness and outreach campaign to enhance understanding amongst internationally trading and FTDL enterprises and to proactively address the skills needs arising from Brexit. 2 Introduce additional customs awareness and higher level customs clearance training and advice for third country trading as the implications of Brexit become clearer. 3 Enhance the provision of financial management advice, training and mentoring for internationally trading enterprises, with a particular focus on currency management, VAT for third country trading, and contract management. 4 Undertake targeted campaigns to attract skilled personnel from overseas. 5 Promote measures to enhance the ability to diversify trade with non-UK markets. Enhance international trading and Logistics/Supply Chain content in education and training provision Build up Ireland’s foreign language capability for international trade (particularly with Eurozone markets) Enhancement of intercultural awareness and international business experience Build up product design and development skills 6 Establish a National Logistics and Supply Chain Skills Group, to manage a coordinated response from the Logistics and Supply Chain sectors to promote the sectors and their skills needs. 7 Develop a schools/communication toolkit and awareness raising campaigns for Logistics, Supply Chain and Transportation careers across all sectors, and an improved understanding of the cross sectoral skills needs, employment numbers and career opportunities in supply chain activities 8 Support the development, and promote the rollout of and engagement with the Logistics and Service apprenticeship programmes.
UK edging to a softer Brexit but road to a deal still looks very rocky Irish businesses need to prepare for chaos ahead as the talks reach the crunch stage
Cliff Taylor (Irish Times)
Theresa May scraped through a key vote on Brexit legislation in the House of Commons on Tuesday, though only – it would appear – by making key concessions to those looking for a softer version of Brexit. While there is predictable debate over what was agreed, the UK parliament looks set to have a bigger role in agreeing the shape of the exit package . This looks like another lurch towards a softer version of Brexit and appears to make a “ no deal” outcome less likely, with the UK government not having parliamentary support for this. But the road from where we are now to softer shade of Brexit still looks very rocky. It is still hard to see how the deal gets done. This means that for Irish businesses trading with the UK, the uncertainty will just roll on. Economics – and common sense – suggests that the UK and the EU will do a deal on a softer version of Brexit, but politics keeps getting in the way. The problem in terms of business planning for the thousands of companies trading between Ireland and the UK, or operating supply chains across the two territories, should not be underestimated. The range of possible outcomes remains impossibly wide for planning, particularly for those in the most exposed sectors such as food.The threat of sterling volatility as the inevitable rows in the talks ramp up is also real. The UK may continue to move towards a softer Brexit, with increasing support apparent in the UK parliament for this route. But the huge political difficulties in London, the red lines in Brussels and, crucially, the shortage of time could still scupper these talks, or at least create huge uncertainty in the months ahead. Businesses relying on the transition period coming into play next March to ensure that trading rules remain the same until the end of 2020 need to realise that this is far from done and dusted. The transition is part of the overall withdrawal agreement which is not due to be signed off until October, with a number of hurdles – including the “backstop” deal for the Irish Border – to be tied down beforehand. Enda Kenny underlines his Brexit legacy Kathy Sheridan: Boris Johnson not fit for one of UK’s highest offices May dodges bullet after extraordinary Brexit Bill negotiation This is all so volatile and unpredictable because proper negotiations haven’t got beyond the first base, which saw an early outline agreement on the UK’s exit bill. Since then all the action has been in London and while there has been talks between the UK and EU teams, there has been no clarity from London and little high level political involvement from the EU’s big players. While a motion to give the House of Commons a vote on the withdrawal agreement was defeated on Tuesday , the price was that the proposal would be reconsidered in the Lords and much of its direction accepted. With the balance in the Commons apparently moving to some kind of softer Brexit, this is important and the political game-planning about how this might pan out is already being discussed. But big barriers to progress remain. The recent interchange between the UK and EU over the Irish Border issue illustrates the difficulty by showing how a hard-fought political compromise in London simply does not cut it in Brussels. The UK’s proposal on the backstop for the Irish Border – the way of avoiding a hard Border if no other way can be found via an eventual trade deal – was politely greeted in Brussels. But it wasn’t long before the EU negotiators were pointing out its shortcomings.
Political sands This, in microcosm, is the problem in the whole negotiations. The only solution politically acceptable to all sides in London will be some kind of arrangement which allows the UK to retain a lot of the benefits of membership but frees it of the resulting obligations. The question now is whether the political sands are shifting fast enough in London to mean concessions can be made in time to achieve a deal by sidelining the Brexit lobby. It still all looks very tricky. Talk to anyone in the European Commission, or Continental politicians about Brexit and you quickly realise two things. First, they aren’t as worried about it as we are, for obvious reasons. And second, they are hugely attached to what they call the integrity of the single market, which guarantees free movement of people, capital, goods and services. In other words the UK’s ability to pick and choose one or more of these is severely limited. If UK politics do move towards a softer Brexit, there are various theories on how this might be structured and what additional measures would be needed in relation to the Irish Border. But whatever the soft Brexit destination, it is still difficult to see how we get to there from where we are now. If the UK wants to remain in the Single Market, for example, how is the issue of freedom of movement to be dealt with? The next interesting point to watch is how far the EU pushes the UK for assurances on the withdrawal deal at the June summit, particularly in relation to the Irish Border. But either way this still looks very messy. Irish businesses need to continue to prepare for the worst and some version of a hard Brexit, while still hoping that it might be avoided. And sterling weakness could hit whenever the big row comes, whether that is June or the Autumn. And come it will.
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