The UK’s Perfect Storm: Brexit, EU Workers Returning Home, IR35 Changes, and Coronavirus | Blog

Posted On February 13, 2020

Businesses in the UK are facing a spate of challenges; there’s the specter of new Brexit-driven red tape on trade, a staffing shortage as some EU workers are returning to their home countries, and UK changes to the IR35 contract worker tax legislation, which is making it very difficult for companies to hire contractors. A Coronavirus pandemic could be the final straw that breaks businesses’ backs. Let’s face it – there is a perfect storm ahead.

With Brexit and the EU trade negotiations still going on, there is little certainty about the red tape that businesses will face in order to trade with each other across the English Channel. Yet, with the transition period set to end on 31 December 2020, there is little time for businesses to prepare for whatever the new trade requirements may ultimately be.

Because adherence to the as yet unclear regulations will increase businesses’ workloads, a natural response would be to hire more staff. But unemployment is at record low, and many skilled EU workers are leaving the UK and returning to their home countries. Furthermore, the UK Office of National Statistics (ONS) reports that EU immigration to the UK is at an all-time low.

The HMRC’s new IR35 rules, which come into effect in April 2020, are exacerbating the problem. Many companies have had to adopt no-contractor hiring policies and cannot fill temporary vacancies. They are already feeling the impact of the regulation. If they can’t hire staff or contractors, where are companies going to find resources to handle the extra workload of trade red tape?

Additionally, widespread cases of the Coronavirus could lead to prolonged periods of sick leave, further reducing the number of staff who are available to help with the increased workload of trading with the EU. While cases are still far and few between in the UK, the impact of the spread of the disease in China has been great. Empty offices and factories in Chinese cities and manufacturing heartlands are already leading to a shortage of parts for cars and other products that are much in demand in the UK.

Clearly, UK businesses are facing a perfect storm.

Investing in digital and Intelligent Automation (IA) technologies can help them tackle some red tape issues, particularly if they use IA for what I call Red Tape Automation (RTA). This could be automation of compliance form-filling and reporting requirements, weights and measure conversions, or making changes to transaction or product-related data and synchronizing them across multiple systems such as those used for sales and revenue to record value added taxes and other duties. Companies that trade with both EU and non-EU countries could automate the red tape for all of those, using rules engines to fill in the right forms and apply the correct rates.

IA is not a perfect solution, as people will be needed to implement technology, and there is a growing talent shortage. Nonetheless, UK businesses will be well served by investing in learning the art of the possible with IA. While the final details of any trade deals with the EU, or new deals with the rest of the world, will not be known for a while, knowing how to implement the requirements quickly using IA can help them weather the impending storm.

For more information about IA, please check out Everest Group’s Service Optimization Technologies research.

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