Those of you who joined us for our 2018 SAP Business One User Day at Hampton Court will know that SAP has been planning for Brexit for a long time. Due to the uncertainty around the specifics of the UK’s withdrawal from the EU, SAP has been working on a number of scenarios to help SAP Business One users make the transition when the UK finally departs the EU.
Last week, the EU agreed to postpone the UK’s withdrawal date until May 22, 2019 – if Parliament can finally agree on the proposed Withdrawal Agreement before 29 March. If Parliament is unable to agree a deal, the EU has postponed the withdrawal date until April 12, 2019.
SAP has now issued new guidelines to users in the event of a ‘no-deal’ Brexit in mid-April. Firstly, all users are advised to consult their tax advisor before making any changes to their SAP Business One solution. Brexit affects both UK-based organisations and those trading within the UK.
SAP has issued a series of guidelines in the case of a no-deal Brexit and how users can adjust to the new non-EU regulations.
Separately, HMRC has issued a new letter to all VAT Registered organisations ahead of a no-deal scenario. This document outlines a number of instructions that organisations will have to complete ahead of the UK’s withdrawal. HMRC has also issued an online tool to help prepare SMEs ahead of the UK’s exit from the EU.
There are a number of implications outside the scope of SAP Business One which SMEs will need to organisation. However, within SAP Business One there are a number of points which users are instructed to consider:
- The EC Sales list will become obsolete after April 12, 2019
- Intrastat declarations will become obsolete after April 12, 2019
- Based on advice from HMRC:
- EU transactions will need to be considered like import/export transactions
- VAT Returns will require imports/exports to be reported like how EU transactions are reported before Brexit (included in boxes 2, 4 , 8 and 9)
- For VAT reports that include dates before and after the Brexit date, it is advised to set up new VAT Codes for imports/exports to be used in transactions after April 12. The VAT Tax Declaration Boxes (and where applicable BAS Codes Definition – MTD relevant solution) will need to incorporate the new VAT Codes.
- To correctly handle transactions with the remaining EU countries after Brexit, the correct Tax Codes need to be set up in Business Partner Master Data and used on documents (invoices) so that exports from the UK to EU countries are no longer treated and reported as EU-cross-border goods deliveries but as trade with countries outside the EU (like for the United States)
- Duty groups may need to be defined so they can be attached to Items that are purchased in the EU-27 countries (the remaining 27 EU member countries) to capture duties in landed costs transactions
- Should account determination be based on VAT Codes, then this needs to be reviewed and amended where necessary
- It would be advisable to process a billing run for all open deliveries (especially for EU Customers) on April 12, to avoid having to maintain correct VAT Codes for future dated transactions
SAP adds that SAP Business One can support import declarations for goods to be released when imported from outside the EU. This can be done by recording customs duty using landed cost functionality. However, it is strongly advised that companies speak with Customs Agents to company any Customs Declaration Forms for items purchased within the EU.
A no-deal scenario works both ways. The remaining 27 EU states will be affected by a no-deal in a similar way to the UK. Any organisation based in the UK transacting with the UK will need to consider EC Sales Reports and local VAT reporting requirements. Any sales to the UK will no longer be relevant to the EC Sales Report.
All transactions with UK business partners will need a VAT code that applies to third-party countries. Also, these transactions will also require landed costs, including custom duties.
Organisations outside the UK and the EU are also likely to be affected by Brexit. After its separation from the EU, the UK will have to agree plans with countries across the globe. WTO terms may be used initially as a default, or specific terms may be agreed with different countries.
If you are unsure on how any of the above impacts your organisation and your use of SAP Business One please get in contact with your Account Manager today.