Whatever the final deal looks like, traveling to Europe won’t be the same as before for UK businesses.
Travel management companies in the UK report trying to give clients as much information as they could over the past few weeks as Brexit negotiations go down to the wire.
The UK left the European Union on January 31 this year, with the Brexit transition period expiring officially on December 31, and question marks remain over work permits, visas and taxes.
“Throughout the Brexit transition period, our consultants and account managers have continued to communicate and advise our customers about potential changes that will impact on business travel. However, there has been a great deal of uncertainty and this is still the case as we approach the deadline of December 31,” said Alison Zacher, FCM head of European account management.
“We’ve had a Brexit Readiness team in place for years,” said a spokesperson for American Express Global Business Travel. “We’re regularly talking to clients about Brexit. We’ve provided information and guidance for a long time. There have been quite a few questions of late of course, but our advice has remained consistent.”
There’s a lot at stake, and for a flavor of some of the issues, take the Business Travel Association‘s Brexit briefing that was held last week with legal firm Travlaw. It covered tax; visas and border issues; intellectual property; trademarks and brands; employment and labor requirements; foreign exchange issues; European Health Insurance; driving licences; data; and GDPR.
One talent mobility platform is even urging companies to recall any staff currently working in EU member countries.
“Make sure to call back your employees that may have gone abroad to work during 2020, as you need to start 2021 with a clean slate,” said Steve Black, co-founder and chief strategy officer at Topia.
The talent mobility platform is also urging clients to set policies for new relocation and remote work requests — not just line manager approval, but tax, immigration and compliance need to chime in.
“Be ready for a tight UK talent market post-Brexit. It will be tighter without easy access to EU talent and many people that were considering a move to the UK in 2020 may have been prevented from doing so by the pandemic,” Black added.
The Year of the Tax Audit
Many European countries will be feeling the pain of the economic slump caused by coronavirus, especially those that loaned billions of dollars to state carriers. They’ll be looking to recoup as much money as possible, and taxing UK workers would be an easy win.
“Governments will be cracking down on the employees coming and going from the UK,” said Topia’s Black. “There will be a microscope on highly regulated industries such as financial services because the jobs may have moved to mainland Europe, but the family stayed behind in London. This raises significant risks around exactly where work is being done — 2021 will be the year of the audit.
“We will see governments paying close attention to organizations that are not compliant with the tax and regulations of their jurisdiction… they will become stricter to try and make up for massive budget shortfalls next year.”
With the growing work-from-anywhere trend, organizations will be leaning on their travel agencies to stay on top of remote work and travel risks created by their employees to ensure they meet all compliance standards.
Corporate travel agency Reed & Mackay has worked with tax specialist Deloitte on webinars and reference guides, and has created an online Brexit Hub exclusively for clients. “It may be minor in relation to the pandemic, but it’s big priority for our clients right now,” said a spokesperson.
The agency sees challenges tracking the combined leisure and business days spent in the Schengen zone, alongside the “what constitutes work” query that determines visa requirements.
“There has also been a lot of uncertainty around the impact of Brexit on the ability of businesses located outside the UK to claim back VAT incurred in the UK, during hotel stays, for example, and for UK businesses to do the same for trips to countries within the EU,” said Robbie Falkenthal, tax director TravelPerk.
“With the impact Brexit will have on the deadlines for companies to recover VAT on these trips, we’re working with our customers to ensure that they can continue to benefit from the savings we offer through our recently launched VAT Solution, which can be up to 20% on their annual travel spend.”
An Even More Challenging Year
Meanwhile, the fallout from the pandemic stands to make the trading environment for UK businesses in 2021 difficult, and the World Travel & Tourism Council warns travel and tourism businesses in the UK will be in jeopardy if prime minister fails to secure an agreement.
Before the pandemic, the council warned 300,000 travel and tourism jobs in the UK, and 400,000 across, the EU could be at risk if the UK left without a deal.
“With a no-deal Brexit, access to markets and the ability of business travellers and holidaymakers to move freely between the UK and the EU could be lost, creating complexity, cost and confusion, and impeding seamless travel,” it said. “Businesses already face enormous economic uncertainty, and we want to avoid any further loss of confidence or disruption which a no-deal Brexit could cause.”
One of the UK’s largest hospitality companies is already expected to suffer next year following the UK’s exit, according to one credit rating agency. On Friday, Fitch downgraded Whitbread, which owns the Premier Inn hotel brand, saying it expected “pandemic-related disruption and Brexit will add to the UK’s already weak operating environment, which is characterised by demand volatility, weak business travel and inflationary cost pressures.”
Businesses need to prepare, and one agency boss wants the government to provide clarity on how corporate travel will change.
“The government has to take action to ensure the smooth restart of business travel or we risk falling well behind our European counterparts,” said Maria Baty, managing director of Altour UK. “Enabling business travel across all industries will be a key driver of the economy and the UK government should engage with stakeholders within our sectors to help shape clear and practical guidance to reopen travel by the New Year.”
The travel management company launched a 24/7 health and safety desk to support business travelers during the pandemic. It expects that desk will switch over to fielding Brexit enquiries over the coming months.
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Photo credit: Anti-Brexit protests took place throughout 2019. LeoLondon / Flickr