No Deal Brexit advice for SAP Business One users
We received the following communication from SAP, regarding the possibility of a no deal Brexit.
"As part of SAP’s commitment to closely monitor the United Kingdom’s departure from the European Union, this update describes our latest understanding of the key impacts on SAP Business One customers, in what is a rapidly and continually changing situation
The UK triggered Article 50 of the Treaty of the European Union on March 29, 2017. As set out under that treaty, the UK had two years to negotiate a Withdrawal Agreement and framework for a future relationship with the EU, before the UK’s exit from the EU at 11pm GMT on March 29, 2019. At a UK-EU summit held on March 21, 2019, a postponement to the UK withdrawal date was agreed, to May 22, 2019 if the UK parliament agrees to the proposed Withdrawal Agreement before March 29. If the UK parliament does not agree to the proposed Withdrawal Agreement before March 29, then the withdrawal date will be postponed to April 12, 2019. It is with the April 12, 2019 date and a no-deal scenario in mind that this letter is being sent; further UK parliament decisions may determine a different date.
If the Withdrawal Agreement is ratified, then the deadline for agreeing the terms of the UK's future relationship with the EU will be December 31, 2020.
A no-deal scenario, also called "hard" Brexit, is where the UK leaves the EU and becomes a third-country at 11pm GMT on April 12, 2019, without a Withdrawal Agreement or framework for a future relationship with the EU.
This communication is to help you to consider the various settings within SAP Business One that can cater for a no-deal scenario. We strongly advise that you consider any changes in cooperation with your customers’ tax advisors. Please note, that although the UK is leaving EU, it is not only UK organisations that will be affected. EU, and other, organisations dealing with UK organisations will also be affected.
Please refer to SAP Note 2519116*, that is specific to SAP Business One.
The following letter has been sent to VAT Registered organisations from HMRC in preparation for a no-deal scenario: Urgent action required: Prepare your business for leaving the EU without a deal
In this letter we would draw your attention to the ‘Prepare your business for the UK leaving the EU’ tool provided by HMRC. This will assist your customer’s organisation to discover more about the changes and the actions to be taken to prepare their business for a no-deal scenario. There are a number of other implications which will need to be considered that are outside the scope of SAP Business One.
You should bear in mind the following points, in connection with SAP Business One, regarding a no-deal scenario:
1- The EC Sales list will become obsolete after April 12, 2019
2- Intrastat declarations will become obsolete after April 12, 2019
3- Based on advice from HMRC, at the following link:
a. EU transactions will need to be considered like import/export transactions
b. 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) – please refer to SAP Note 2763478*
4- 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.
5- 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)
6- 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
7- Should account determination be based on VAT Codes, then this needs to be reviewed and amended where necessary
8- 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
NOTE: SAP Business One (partially) supports import declarations which need to be made to release goods imported from countries outside of the EU. You can record customs duty by using landed cost functionality. We strongly advise that your customers engage with Customs Agents to deal with Customs Declaration Forms for goods purchased from EU Countries.
It is presumed that every EU-27 (the remaining 27 EU member countries) country will be affected by a no-deal scenario similarly. Any EU-27 organisation which will be transacting with UK organisations will need to consider the effect on EC Sales reports and local VAT reporting requirements. Sales to the UK will no longer be relevant for the EC Sales report. All transactions with UK business partners will need to use a VAT code that applies to third party countries. These transactions may also include landed costs, including customs duties.
With a no-deal scenario, organisations in countries outside of the EU will be affected based on agreements that the UK will put in place with those countries. It is likely that the UK will have to forge new trading agreements with every country, or bloc, outside of the EU. WTO terms may be used as default, or specific terms may be agreed.
Brexit Engagement Support
1) Check SAP Note 2519116* for the most up-to-date information on Brexit implications."
*Please note, you must login to your online SAP account in order to read the SAP notes.*