Are You Ready for a No-Deal Brexit?

Which areas of your Enterprise System will potentially be impacted by Brexit?
There are many uncertainties about the nature of Brexit until the negotiations are complete, and the real effect on businesses may not be seen until implementation begins. As an SAP Finance Expert, we can see that many business processes will be affected by Brexit, such as operational data, business planning, payment, cash management, interest rates, invoicing and legal reporting. Heavy impacts on the configuration of ERP systems is to be anticipated. SAP released 33 notes about Brexit and all of these SAP notes discuss configuration changes that could be relevant to you, if your business operates in the UK and/or in the European Union.

Possible Changes in SAP Finance after Brexit
Below, we provide you with an overview of the settings you need to check:

Organizational Model
Currently, any company code created in the SAP system with “GB” as the country qualifier is a company code within the European Union. Similarly, this concept applies to business partners such as vendors, suppliers, banks and customers located within the UK. Subsequent to Brexit, any company code that is created in the SAP system with the country “GB” will no longer be applicable within the European Union.
Given that beneficial structures like EU triangular deals are no longer applicable, it may even be necessary to create new entities in the UK or in various locations in the European Union. The SAP system will need to be configured and tested to aid the new organizational structures, and the changes in the current organizational components. Furthermore, it may be advantageous for enterprises to establish companies inside or outside the UK. This modification in a company’s structure will require appropriate mapping of settings in the SAP ERP system.

Tax Determination
The area which will have the highest impact on the SAP system after Brexit – No Deal is the tax. As the country code “GB” will no longer be acknowledged as an EU country, many changes will have to occur in tax determination procedures.

  1. The tax procedures for the United Kingdom (TAXGB) may have to be reviewed in its entirety, dependant on the arrangement and decisions that are made by the UK government regarding VAT calculation for foreign businesses.
  2. The tax determination procedure ( In standard SAP, this is the access sequence MWST) will need updates, in the configuration (accesses, requirements) and master data alike: all condition records in which “GB” is either the departure country of the destination country has to be updated).
  3. As no intra-community business can be done anymore from within UK companies, tax codes for EU business in the TAXGB tax procedure will be obliged to be disabled. 

Reporting
Once there is more clarity of the new situation in regard to Brexit, conditions for the required information on government reports, e.g: EC listings, etc. may change. This is the reason that all outputs related to taxes will have to be reviewed to ensure their compliance.
Customs reporting: Business from the UK to EU member states will be considered as exports and will have to be reported to customs accordingly.
It has an impact on internal and external reporting, F. example: Financial Statements, P/L and balance sheet, business planning, cash management report and tax reports.

Master data
As a consequence of “GB” no longer being a company code within the European Union, any business partners such as customers, vendors and banks that are located in the United Kingdom has to be changed. This data will require updates mainly in master data fields for business partners and configuration data for company code settings, chart of account and business processes. All tax-related master data for customers, vendors, plants or business partners need to be updated. In many occasions, specific tax indicators have been created to support typical EU flows like triangulations. These also have to be reviewed.
Within Treasury, you potentially will have to prepare new Business Partners (Role: Counterparties) as some of the large banks based in London today, will move to mainland Europe post-Brexit. These new counterparties will have to be setup, new standard-instructions applied, mapped to trading platforms and updated in your credit risk reporting.

Payment Settings
According to European Payments Council (EPC) decision UK will remain in the SEPA system. For payments over 1.000 Euro outside the Union the payer’s address must be included in the payment data. Check your payment methods flagged as “EU internal” transfer and deactivate them for country GB. The settings described above are considered to be the minimum requirements to comply with the necessary changes prescribed by law. Nevertheless, there may be alternative effects leading to changes in the system. These include terms and conditions and language on POs, sales rebates, open purchase orders, invoices and any other documentation. Later delivery dates due to delayed or longer customs clearings must be considered prior to the scheduling of shipments and the disposition parameters.

Recommended approach
Infiniance recommends you assess the impact of Brexit on your SAP Finance, Cash Management and Treasury in three key steps:

  1. Assess your current Finance and Cash Management/Treasury systems
    Walk through your current processes, from the funding model to trading, reporting and tax determination, and ascertain the potential impact of Brexit.
  2. Check with your SAP Finance and Cash Management/Treasury experts
    They will have to look at the current set-up of your SAP system and advise you on potential required system changes
  3. Build a roadmap
    You draw up a clear roadmap and made-to-measure assessment of your SAP Finance and system.

If you do have any question in this matter do not hesitate to contact us

Please review following SAP Notes:
• Note 2768412 provides a number of recommendations in FI
• After creation new tax codes, you can deactivate old tax codes to remove them from the list. Check SAP note 2074351 for details
• 2571675 Note VAT registration number for GCC countries
• 2574857 Note Prerequisite objects for note 2571675
• 2576647 Note VAT registration number for customer/vendor in GCC countries
• SAP note 2778393 provides a new select option for EU sales list, so you can remove these records by setting the selection to unequal “GB*”
• 2766992 describes changes that could be required within Global Trade Services (GTS)
• Notes 2753338 and 2754659 talks about the recommendations for a possible no-deal outcome.

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