Note: This article has been updated ahead of the 2019 general election.



The twists and turns in the Brexit process have been as unpredictable as it gets.


Following Boris Johnson’s pledge to die in a ditch before delaying Brexit, a no-deal Brexit looked to be a distinct possibility on 31st October as negotiations stalled. The UK and the EU eventually reached an agreement on a deal with a couple of weeks to spare.


Despite Mr Johnson’s withdrawal bill passing its first reading in the House of Commons, the Letwin amendment designed to block a no-deal Brexit also passed through Parliament. After the Government requested another extension from the EU, Brexit was delayed until 31st January 2020.


In response, the Prime Minister called a general election for 12th December. Getting Brexit done is the main Conservative campaign promise, which means the prospect of No Deal is back on the horizon.


This could occur on 31st January, if Mr Johnson’s deal is unable to pass Parliament. Alternatively, the UK could leave the EU without a deal at the end of 2020, if talks on a free-trade agreement fail.


Both the Prime Minister and the Foreign Secretary, Dominic Raab, have recently refused to rule out leaving with no deal at some point in 2020. No-deal preparations are also set to continue after the election.


Business leaders have been warning about the impact of leaving without a deal since Theresa May’s original Brexit withdrawal agreement was rejected by Parliament in March.


In July, the Confederation of British Industry (CBI) said a slowdown in investment, disruption to the delivery of goods, and the uncertainty of global trade negotiations after a no-deal Brexit would be a tripwire into economic chaos.


With No Deal still possible in 2020, what can you do to protect your assets and business?


Get ready for a recession


Economists have widely predicted a recession in the UK following a no-deal Brexit.


KPMG forecasts a 1.5% decline in the economy in 2020, should the Government fail to reach an agreement with the EU. The UK would enter a recession after two consecutive quarters of negative growth in GDP.


This potential recession is likely to coincide with downturns in the Eurozone and in the United States, creating an unstable global financial climate.


The Bank of England has warned of a sharp drop in the value of the pound after a no-deal Brexit. Sterling has already lost 20% of its value since the referendum result in 2016.


Trading under the terms set by the World Trade Organisation would also involve expensive tariffs on some imports until new agreements are made.


While a recession will impact different industries to varying extents, you can generally expect banks to be far more cautious about lending, and customers to spend less money.


The long-term impact of a no-deal Brexit is difficult to forecast. Predictions have ranged from a few years of instability to decades of sustained economic decline.


In such an uncertain situation, it’s imperative to protect your assets.


Consider your business structure


The most important thing to address as in a no-deal Brexit scenario is the structure of your business.


Being registered as a sole trader could pose a serious risk, if you’re in an industry that is likely to bear the brunt of leaving the EU without a deal.


Under sole trader status, you and your business are treated as the same legal entity by HMRC.


The debts and liabilities of your business are yours to fulfil. If your business fails owing money to creditors, then your personal assets are fair game to repay those debts.


There’s no limit to liability as a sole trader. In extreme cases, this can lead to the loss of your home and savings, or personal bankruptcy.


The best way to protect your assets from this risk is to set up a limited company.


One of the main advantages of limited company status is that it offers limited liability. As your business is a separate entity, your personal finances are largely protected.


If a no-deal Brexit leads to a recession and your limited company becomes insolvent, debts will only be recovered from the company’s bank account and assets.


Your business may already be registered as a limited company. In that case, consider rearranging your affairs into a group structure, which will offer extra protection for your assets.


This isn’t a straight-forward process and you’ll need an accountant to make sure it’s properly carried out.


Build up your cash reserves


A no-deal Brexit would cause significant issues with cashflow for some small businesses.


There are several consequences to leaving the EU without a deal that could cause cashflow problems. These include delays to the delivery of goods, paying a 20% VAT on imports from the EU, and reduced confidence from banks and investors.


Many companies have been stockpiling cash ahead of the UK’s departure from the EU. Small businesses have reportedly increased the amount of cash in their current accounts by 78% in the last two years as they prepare for Brexit.


While there is little time remaining until Mr Johnson’s new deadline for leaving the EU, saving funds and spending cautiously makes sense until we have more certainty about the UK’s future trade arrangements.


Cashflow issues are notorious small business killers, especially if your business relies on bank guarantees. Check the terms of your guarantee and ensure you’re fully aware of its conditions. You may have signed the guarantee several years ago.


Consult your accountant


Your accountant should have already advised you on how to protect your business from the dangers of a no-deal Brexit. And if they haven’t, we will. Appleby Mall is offering a free consultation worth £250 to draw up a plan to protect your assets.


Making the required changes to protect your assets can be a complicated and time-intensive process. It can take up to 18 months to complete.


The clock is ticking down to 31st January. With the Conservatives tipped to stay in power and committed to leaving the EU by that date, it’s important not to wait around.


We can offer decades of experience in business advice and a keen eye on any developments in Brexit. If you’d like to get in touch, fill in the contact form below or call us on 01902 422020.


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