Are The Brits Still Coming…?!

As the day comes ever closer when the UK and the EU have to finalise their negotiations on the UK’s departure from the EU, many opinions, predictions and outcomes have been discussed and poured over for what may come. The truth of the matter is that none of us really know what effect it will have on the UK and global economy until time has passed and the experts and scholars have had time to digest and reflect with 20:20 hindsight in years if not decades to come.

In the global economy that many, if not all of my clients operate in, with a particular focus of the trade between the UK and the US, I was particularly interested in the former London Mayor, and now foreign secretary, Boris Johnson’s “Ode to Brexit” as one commentator called it, that he penned for The Telegraph newspaper in the UK; swiftly followed by PM May’s speech in Florence.

Unfortunately, I feel neither Johnson’s article, nor May’s speech, gave further indication as to where the UK sees itself post Brexit in 2019. However, both missives were certainly on the positive side of events but had very little detail, as pointed out by the EUs chief negotiator, Michel Barnier.

So where does this leave UK businesses?

Since the triggering of article 50 in March 2017, most businesses, boards and their owners that I have come across have been looking to address certain concerns they have with their businesses back in the UK and their evolution. These clients, as is the way with successful entrepreneurs, are seeking new opportunities due to this uncertainty and I see that Brexit has given them the impetus to do so, and are increasingly looking to the US for that continued growth.

 Why the US?

UK businesses come to the US for many reasons, but the main one is plain and simple; it’s the largest economy in the world. But what I hear from clients are many differing reasons and I think it would be worthwhile to go through some of these that may appear obvious, but are worth listing nonetheless.

Common language.  For UK based companies there is no need to command a new language or hire dual linguists to assist with the growth. They can understand what potential customers, employees, authorities and advisers say and require and can make decisions quickly and effectively with little guesswork or misunderstandings.

US based clients.  Most UK companies already have US based clients they serve in the UK. Most of our clients have looked to exploit that relationship and move to the US to do so and therefore leverage that relationship in a myriad of ways.

Funding.  With new ventures requiring seed, VC or PE money, the largest of those investors still sit here in the US and to have the opportunity to both access the investment required to grow a business coupled with the market to reach those growth goals, it’s seen as a win-win situation.

Stability.  Brexit has created uncertainty that has still not been relieved. Businesses and their owners that have growth aspirations have looked where that growth can come from if not the UK. Going to Europe has been seen by some to potentially create greater uncertainty for a UK business. Therefore the US offers a stable economy that allows a business to move forward on solid foundations in the anticipation that the historically close UK/US ties will abide.

Now what I haven’t referred to yet is that elephant in the room. And no not POTUS himself; but the political uncertainty that the current administration in the White House finds itself in since January of this year.  Regardless of your political views, the reality is that many of the key policies that Trumps successful campaign relied on have thus far proven impossible to get through the Senate. This has even meant that Trump has looked to broker deals with the Democrats, something that many thought would not be countenanced by either side.

What many of us in the professional services industry thought we would get, particularly in the tax and accounting professions, was a more business led focused tax regime that would encourage investment to the US by reducing both the complexities and the rates of the tax system, coupled with a reduction in regulations.

We have yet to see either come to fruition but the anticipation is that something will come of one, if not both of them, during Trumps first term; if not exactly as he would have hoped for.

Despite all of the political backbiting and copious amounts of copy and coverage that Trump has garnered, I have still seen a great appetite for UK businesses that are able to see through all this bluster and concentrate on what matters most to them:

How do I grow my business and where can I do so outside the UK?  The answer I have seen time and time again, is the US of A; and I don’t see that changing any time soon and nor it appears do UK businesses.

 

  • Managing Director
  • CliftonLarsonAllen Global, LLC
  • New York, NY
  • 917-753-2148

Kevin leads the global tax, accounting, and consulting services for CLA out of New York and has more than 17 years of experience in U.S. international tax compliance. Kevin has developed both a broad and deep knowledge within the realms of U.K. and U.S. international taxation with particular focus on businesses, entrepreneurs, and high net worth families moving and/or expanding from one jurisdiction to another.

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