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Brexit White Paper

Brexit White Paper

Following an eventful month for Brexit, the Government published their Brexit White Paper on 12 July 2018 and debated the Customs Trade Bills in the House of Commons.

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The publication of the Brexit White Paper on 12 July 2018 is a key milestone in the Brexit process. Clarification of the Government’s proposed negotiating position has been largely welcomed. However, many have already expressed concern over a number of significant gaps. We have provided an overview of the key points from the White Paper, with a particular focus on those with a tax impact.

What does the White Paper say?

The Brexit White Paper sets out a number of proposals, including many with a tax impact:

  • Customs duties: the White Paper proposes a free trade area for goods, achieved by a common rulebook for all goods, commitment to any necessary ongoing harmonisation with EU rules, and a strong role in shaping international standards. A ‘Facilitated Customs Arrangement’ would create a combined customs territory, with EU or UK tariffs (as applicable) to be applied on entry of goods into the UK through a ‘trusted trader’ scheme;
  • Services: broad-ranging proposals include regulatory flexibility, preserving the mutual benefits of the integrated market, and mutual recognition of professional qualifications. The UK would not replicate EU ‘passporting’ and would maintain autonomy in economic and regulatory arrangements;
  • VAT: the UK would leave the EU Single VAT Area and maintain sovereign discretion to set its own VAT rates. The White Paper also proposes application of common cross-border processes and procedures for VAT and excise, although very little additional detail is provided;
  • Governance and regulation: all UK laws would be legislated by the UK Parliament (or Devolved Administrations). However, there would be a common rule book on state aid, cooperative arrangements between competition regulators and high regulatory standards for the environment, climate change, and social, employment and consumer protection. There would be a Joint Committee for ensuring consistent interpretation and application of UK-EU arrangements and resolution of disputes; and
  • People: free movement would end, although a (reciprocal) mobility framework would be introduced.

What does it mean for business?

Although the White Paper does not offer additional certainty on the final Brexit deal, it provides some much sought after clarity on the UK’s negotiating position. Its publication offers businesses an opportunity to get their teeth into the detail and analyse some key issues, such as the separation of goods and services. However, key questions remain, both in terms of detail (for example on the proposed common cross-border processes for VAT) and the EU’s response to the UK’s proposals.

What happens next?

The Prime Minister has charged the UK’s negotiating team to proceed at pace in discussions with the EU on the basis of the proposals in the White Paper.

A detailed EU response to the UK’s proposals is provisionally expected in September 2018. Assuming political consensus has been reached, the Withdrawal Agreement would be expected to follow in October 2018, ahead of the transition period beginning on 29 March 2019.

With the current level of uncertainty, we expect that businesses will continue to adopt a pragmatic but determined approach to Brexit planning: keep making ‘no regrets’ decisions; undertake ‘worst case scenario’ analysis and contingency planning; and be ready to implement any necessary changes once there is clarity on the final deal.

For further information please contact:

Tim Sarson

Sarah Beeraje

 

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