KPMG’s Brexit Forum took place on Wednesday 18 October to a packed house at The Palace Hotel, demonstrating that Brexit is clearly on everyone’s radar.
KPMG’s Brexit Forum took place on Wednesday 18 October to a packed house at The Palace Hotel, demonstrating that Brexit is clearly on everyone’s radar. Despite Theresa May’s insistence that “Brexit means Brexit”, the question on everyone’s lips was “what does it mean, especially for the Isle of Man?”
The forum began with an address by the Isle of Man’s Chief Minister, the Hon. Howard Quayle MHK, who noted that “UK withdrawal from the EU is a once in a generation change.” The Chief Minister acknowledged the sheer complexity and volume of issues involved, compounded by the uncertainty that Brexit creates, are the main challenges for the Isle of Man. Like some of the following speakers, the Chief Minister was in a hopeful mood and, whilst recognising the scale of the task ahead, pointed out some of the positives to bear in mind such as the fact that the Isle of Man is an associate member of the World Trade Organization (WTO), which perhaps puts it in a better position than other comparative jurisdictions.
Following the Chief Minister’s remarks, Mark Essex, Director of Public Policy for KPMG in the UK, addressed the audience. Mark has been thinking about Brexit since 2014, and on 1 March 2016 predicted the result for Leave. He now leads an intelligence and analysis team who are researching the impact of Brexit on KPMG’s clients. Mark outlined the complexities of the negotiations commenting that it is difficult to see what kind of deal would satisfy all stakeholders, raising the very real possibility of no deal. KPMG in the UK has designed a Brexit Navigator which can be found on its website. This is designed to help businesses identify the deadlines that may apply to them as March 2019 approaches, in the event there is no deal by then. Businesses should be analysing their own exposure to Brexit, as well as the effect Brexit may have on their supply chain and customers - no two businesses will be the same. Mark was keen to stress that he is an optimist when it comes to Brexit, adding that whenever businesses are faced with a challenge like this, there are always upsides if they can be nimble.
Mark’s upbeat message was followed by an analysis of the Isle of Man’s position in relation to Brexit given by Professor St. John Bates. Professor Bates taught constitutional, commercial and EU law before serving as Clerk of Tynwald and Counsel to the Speaker. He now runs a consultancy company regularly retained by clients including the World Bank, the Organisation for Economic Co-operation and Development (OECD) and the Council of Europe. Professor Bates focused on the legal and political considerations the Isle of Man needs to tackle in the face of Brexit.
Whilst an Isle of Man Bill for Brexit has not yet been published, it is likely to be similar to the UK’s European Union (Withdrawal) Bill 2017. There are some contentious issues in the UK Bill, in particular the power to amend by secondary legislation which is of particular concern in an Isle of Man context. From a political perspective, Professor Bates believes that the Isle of Man’s ability to inform negotiations is hampered by the nature of its relationship with the EU and the fact that the Isle of Man’s future relationship with the EU will be decided as a result of the UK’s negotiations with the EU.
Paul Cawley, Senior Manager, Indirect Tax at KPMG in the Isle of Man, then analysed the possible VAT and customs position following Brexit. He outlined the likely options, noting that as the UK increasingly pursues sovereignty in as many areas as possible, particularly with regard to the free movement of people, the more unlikely it is that the UK will remain a member of the single market or customs union. Whilst the default
“no deal” position may seem like a cliff-edge, trading under WTO rules is at least something the UK has dealt with before.
A bespoke deal with single market access will take a long time to agree and is unlikely to be in place by March 2019, increasing the likelihood of a transitional period. Paul reiterated the view expressed by earlier speakers that the services economy was in a relatively good position, which was welcome news for the Isle of Man. Opportunities may arise, especially within the insurance industry, and as gatekeepers of our
own tax, it will be important to ensure that we change it to attract businesses to the Isle of Man. Paul concluded that, whilst it is difficult to plan in an area of such uncertainty, businesses should start looking at what their position will be under WTO rules.
Simon Nicholas of KPMG in the Isle of Man then opened the panel session with Mark and Professor Bates being joined by Sandra Skuszka, Head of Indirect Tax for KPMG in the Isle of Man, and Carl Hawker, Deputy Chief Executive for the Department for Enterprise. Questions ranged from whether Brexit was an opportunity to grow or to seek to maintain the status quo, to what businesses most want out of Brexit. Attracting talent to the Isle of Man and the continuation of the Common Travel Area were points of particular concern, as well as the action businesses should be taking now.
The popularity of the event itself is an indicator that Brexit is firmly at the forefront of people’s minds across industry and Government in the Isle of Man. While the final outcome is still unclear, the message seems to be that, if handled well, Brexit could be a great opportunity for both businesses and the Isle of Man economy as a whole.
© 2018 KPMG LLC, an Isle of Man limited liability company is the Isle of Man member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative “KPMG International”, a Swiss entity. All rights reserved.