Kitty Miv, Editor
15 February, 2019
According to European Council President Donald Tusk, a special place has been reserved in the afterlife for those seeking to bring about a hard Brexit without a plan. By "special," Mr Tusk didn't mean "nice." What he meant was that Boris and Nigel won't be needing to pack their winter clothes for life in the forever after.
Unsurprisingly, such comments have merely served to fan the flames of the already white-hot Brexit debate. But, away from the fiery rhetoric, member states are at least beginning to make preparations for a no-deal Brexit in an attempt to cushion the blow for taxpayers and businesses. How effective they will be is another matter.
In the Netherlands, State Secretary of Finance Menno Snel informed parliament late last month that the Tax and Customs Administration is preparing for the UK's withdrawal from the European Union without an agreement.
Then, a few days later, Snel told lawmakers that the Government may put in place a "temporary transitional tax law" to provide certainty for business and individual taxpayers who may be negatively affected by a no-deal Brexit. This is intended to provide Dutch taxpayers with interests in the UK with the same tax treatment as if the UK hadn't exited the EU, until the end of 2019.
Ireland, arguably the country most at risk from any negative impact – for security as well as economic reasons – is also preparing for future scenarios, worst case or otherwise. On February 6, 2018, Ireland's Finance Minister, Paschal Donohoe, confirmed that the Government proposes to introduce a system of postponed accounting for VAT should there by a no-deal Brexit. This means that VAT-registered businesses importing goods from the UK will be able to account for import VAT on their VAT return, rather than having to pay import VAT on or soon after the time that the goods arrive at the Irish border – a measure intended to alleviate expected cash-flow problems for businesses. The Irish Government is also making preparations at ports and airports to deal with the consequences of what it calls a "disorderly Brexit."
One has to look quite hard for other examples though, which feels somewhat counter-intuitive given the whole point of such preparatory measures is to provide certainty to as wide an audience as possible. You'd think governments would be shouting these announcements from the rooftops, not burying them among lists of press releases. Belgium, for example, not so much announced as whispered the fact that a draft law dealing with the predicted consequences of a no-deal Brexit was among a series of preparatory measures being taken by the government. Indeed, the news item followed such grave matters as the renewal of the mandate of the Deputy Head of the National Vacation Board, and a regulation on inland waterways.
The UK itself, of course, has been making preparations for several months. Apparently, food and medical supplies are being stockpiled, and a disused airport in the south east of the country will be transformed into a giant parking lot for EU-bound trucks facing an endless wait for a signature from a yellow-vested customs official. Maybe this isn't such a big deal. After all, the British are famed for their love of a queue. The only trouble is, if these poor truckers are fortunate enough to get on a boat, they might not get off it again – France's yellow-vested officials might still be having a riot of a time in Paris.
On a more mundane and less sensational note, businesses will probably be pleased to hear that the UK Government is also making certain tax and administrative preparations for a hard Brexit. The latest development came in the form of the newly announced "Transitional Simplified Procedures" (TSP) for customs. This is designed to make importing easier for an initial period of one year, should the UK leave the EU without a deal, allowing businesses time to prepare for usual import processes. According to Her Majesty's Revenue and Customs, the Government has written to 145,000 VAT-registered businesses trading with the EU to communicate these measures. I hope the Government has been stockpiling paper too, then.
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