Brexit - Where are we now?

 

The honest answer would seem to be that nobody has got a clear idea.  Many are espousing opinions, but it seems that even those negotiating on behalf of the United Kingdom do not know what they aim to achieve, or at least have no intention of telling UK businesses and citizens what they are up to. The argument that in doing so it would damage the UK’s negotiating position is unsustainable given the outrageous statements which continue to be issues by those in charge of the process for the UK.  Their position seems to be based on the rest of the European Union rolling over and asking the UK to tickle their tummies, which means that nobody needs to know the UK’s position.  Even heavyweight boxers generally show more respect to their opponents.

Matters are not helped by the UK having a minority Government backed by a sectarian party from Northern Ireland. In reality, if the Government believes it is likely to be defeated in Parliament it either fails to put things before Parliament (and right now that includes anything to do with Brexit) or else seeks a last-minute compromise (otherwise called a backdown) in order to avoid a defeat. In the meantime, the main opposition party seems to have no clear policy, seemingly waiting for the Government and its allies to tear themselves to bits, leaving it to sift through the pieces. It is no wonder that rumours of an Autumn General Election persist.

Some clarity, at least, has emerged from the Confederation of British Industry (“the CBI”), a very powerful lobby group, which has set out its case that the UK needs to remain within both the Single Market and the Customs Union.

Right now, the official lines from both the UK Government and the Official Opposition are that Brexit means leaving both the Single Market and the Customs Union, but adopting new measures which won’t be called the “Single Market” or the “Customs Union”, but have the same benefits for all concerned.  There is also talk as to the UK accepting freedom of movement and the supremacy of the European Court of Justice to remain in both the Single Market and the Customs Union. There also appears to be an appetite for a transitional period, at long last, which may avoid the potential cliff edge looming on 31 March 2019.  At the risk of seeming very stupid, I cannot see why the UK would leave the Single Market and the Customs Union to then have something else which is the same, but upon which the UK has no direct political influence and, indeed, the UK has to pay to join.

In the meantime, a phoney war continues with the UK implementing decisions of the European Court of Justice whilst continuing to demand that it should not be the final court for the UK - and here I do see some confusion as my understanding is that the European Court of Justice makes decisions on questions which are then returned to the national court for implementation - in other words, the UK’s national court already sits at the top of the legal tree.

You can fully understand why the CBI has made its call. Business needs certainty, and right now anybody involved in trade with the UK has no such certainty. Indeed, some businesses are making decisions concerning, for example, investment over the coming ten years, some decisions being made today being implemented over the next couple of years. So, what would a business do with, say, €10,000,000 investment on the horizon?  I would suggest that we have some indications already as to what the commercially sensible action is, and it is not to invest in the UK which is a travesty for the UK economy. 
So, whilst my world of VAT and Duty will be filled with interest over the coming two to five years, my clients do not wish to have any such fun and games. 

Accordingly, I think it is essential for the UK Government and the European Commission to publish their negotiating positions on Brexit.  And I believe those policies should not only be published soon, but also receive the ratification of the relevant Parliaments. Only that way will business see what is on the table and thus be provided with some information upon which to base decisions.  31 March 2019 is not far away!

Article written by Steve Botham - Covertax Chartered Tax Advisers

Website:- www.covertax.co.uk

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