INFORMATION


Tackling Brexit - just what is the right approach?


Ron Mendes, MD of PROSPA (UK), a business consultancy which works with clients to find modern, effective solutions, analyses how a dual approach to Brexit could be the answer to future success.


Brexit is the biggest challenge for Britain since the two World Wars that involved transition from known to unknown environments. Every other significant occurrence for the UK, nationally or internationally,


has been a transition from a known to another known environment. That includes joining the then European Economic Community. From personal experience, advising companies to transition from


communist origins in Eastern Europe and Central Asia to a capitalist operating environment was also from one known environment to another. So too was transitioning a non-profit sector with 1,000 organisations to a profit environment. No commercial examples are readily present in the UK of transitioning


from a known to an unknown environment, even for corporate rescues. Crucially, there’s precious little time left to address the Brexit challenge,


among others that confront boards and management. There’s been a lot of talk and rhetoric for the past 18 months between the EU and UK but little resolution and clarity for businesses to readily act on. Therefore, the following framework approach cuts to the chase.


STRATEGY The suggested Brexit strategy consists of a dual approach of assessment and action in two phases; a pre-Brexit defensive phase and a post-Brexit exploitative phase (if such opportunities exist post-Brexit). Only the defensive phase is covered here; the exploitative phase will be addressed later if such opportunities transpire. The Assessment element needs to be forensic in nature and the action


element clinically executed. Any deviation may have negative consequences for a business in the new Brexit world. Currently, there is a variety and abundance of speculative assessment advice but an unfortunate absence of what action to deploy.


‘There’s precious little time left to address the Brexit challenge’


ASSESSMENT The Chamber's Brexit Checklist is an authoritative document that has arrived none too soon. It provides a seminal guide of a qualitative nature regarding an organisation's Brexit exposure. To complement that, the PROSPA consultancy has formulated a


quantitative vulnerability test that’s easier and quicker to carry out. Both are necessary. The vulnerability test concerns preliminary action prior to using the Chamber's Brexit Checklist as it identifies businesses exposure to Brexit using diagnostic labels of high, medium or low primary vulnerability and secondary vulnerability too.


ACTION Two kinds of action can be taken following assessment. The first is light touch action. It’s the most common business reaction to challenges e.g. 'tweaking' the business plan or flexing sales. The second and more substantive response is dynamic action - such as remodelling the business similar to invasive surgery to cure the causes. Great care should be taken that customer value is preserved in dynamic


action. Diminution in value may have a negative result. Additionally, culture change and enhanced leadership skills are necessary where dynamic action is involved. Finally, dynamic action might be require over an extended time as it


could extend into 2020 and beyond when the transition period ends. Therefore, use of formal project management methodology may be necessary.


Debunking the R&D claim myths


Sheetal Sanghvi (pictured), Associate Tax Director at Chamber Strategic Partner RSM, pens her first column on the common myths and misconceptions that often stop companies making an R&D claim.


Research and development tax relief and credits are a key part of the Government’s strategy to encourage investment in innovation in the UK. However there are two common assumptions made by companies:


1) They do not undertake any qualifying R&D activities


2) It is too difficult to make a successful claim


Companies in practically all


sectors will undertake some qualifying R&D activities. They just don’t recognise their own innovation and therefore don’t


make appropriate claims, which can be easier than you think. How much could this mistake be costing you? R&D claims could entitle


companies to significant tax relief and present businesses with an opportunity to reduce corporate tax payable to HMRC. Companies should, therefore,


make the most of this generous tax relief and revisit their eligibility to make a claim. The extra benefit could make a difference to a company’s bottom line.


Myth busted: 1) R&D tax relief is only for companies that employ people in white coats


Many assume only scientific


laboratories or research and technology companies are eligible. However, any company involved in technological or scientific problem- solving can make a claim, including those operating in manufacturing, engineering, software development and construction. HMRC figures show


manufacturing businesses made the most R&D tax relief claims in 2014/15, followed by information communications companies and those in the professional, scientific and technical sector. More than 100 R&D relief


requests were submitted from


organisations in construction, health and social work, arts, entertainment and recreation, agriculture, forestry and fishing, finance and insurance and transport and storage.


Myth busted: 2) My company hasn’t invented anything, so we can’t claim and 3) We can’t claim as our customers have funded our R&D will feature in next month’s column.


business network May 2018 67


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