Tempting though it may be to hide our heads under the collective blankets, there’s no escaping the need to start pondering the impact of Brexit.
It seems all but inevitable that this will now go ahead. And no-one knows how this is going to pan out, other than the transition is going to be painful. How painful remains to be seen.
The Bank of England for example is going to some pains to emphasise that our banks are in a strong financial position and post Brexit challenges have been modelled.
We emphasise that the thoughts set out below are at this point are initial thoughts only. This is not intended to form the basis of any definitive action or change.
Clearly other areas that are more likely than not to see change and develop and include immigration, employment law, health & safety, pensions, property values & demand, Court procedures and litigation and interpretation of the law. Such matters are of course for your other professional advisers.
Personal, Corporate Taxes & VAT
Given personal tax is set by national governments, there are unlikely to be any major immediate changes but clearly George Osborne warned in the run-up to the vote that he would call an emergency budget after to raise up to £15bn in new taxes, including higher rates of income tax and an increase in alcohol and petrol duties.
Whilst there may be short-term pressures on national finances, certainly whilst there is a right wing leaning government, it seems likely that the Chancellor (whoever that might be!) will continue to want to position the UK as a jurisdiction that seeks to attract international investment.
Charities
EU funding is clearly going to be withdrawn or over time release reduced so fundraising for UK charities inevitably will come under increasing strain. Suggestions are being made that some charities may want to establish European affiliates to mitigate this but this would clearly be a very significant step to take at this time.
If Brexit causes a recession in the UK, charities dealing with disadvantaged people, poverty, ill health or other crises are likely to experience increased demand for their services.
Those with substantial investments may see falls and unusually high levels of volatility around this. Taking early advice from your investment advisers will therefore be imperative.
Charities will want to carefully monitor any changes to legislation that the post-Brexit Government makes, to assess how this might impact on their beneficiaries.
Changes to UK direct corporate tax rules on group relief and transfer pricing will now be unnecessary and again it’s unlikely that the Chancellor would want to risk the UK’s business friendly image combined with a low corporation tax rate (20% to become 17% by 1st April 2020) particularly given the clear atmosphere now of uncertainty over current & future investment by business.
Whilst VAT is an EU tax, it seems highly unlikely that it will be abolished as it is responsible for 18% of all UK tax revenue which will be vital going forwards especially as a tax to which we are all well used to paying.
Future decisions on VAT by the European Court would cease to be binding but may still be influential on the UK interpretation of VAT and the restriction of the minimum rate of 15% no longer applies.
VAT compliance obligations for many UK businesses will increase as they would need to register in every EU member state in which they did business.
On Brexit, unless and until an alternative arrangement is negotiated, exports of goods to EU countries will become liable to EU customs duties and import VAT in the destination state. Imports of goods from the EU to the UK would likewise become liable to VAT and duties. Also the UK would have no access to any preferential terms of export existing between the EU and third countries outside the EU.
