As the Conservatives secure a majority in the general election, Alison Horner, Indirect Tax Partner at MHA MacIntyre Hudson, shares her thoughts on what the new government’s plans for Brexit will mean for UK businesses and believes careful planning is still necessary to face expected scenarios.
Horner said, “The Tory majority means that the new government will move swiftly to ratify the Brexit Withdrawal agreement, in order to prevent the UK crashing out of Europe with a no-deal on 31 January 2020. Once this is approved, a transitional period of Duty and VAT free trading conditions will be in place until 31 December 2020, while a new trade deal is negotiated with the EU.
“However, what happens at the end of 2020 is unclear. Most commentators and industry specialists believe that reaching a Free Trade agreement, ratified by the World Trade Organisation, in less than a year is wishful thinking at best. If such an arrangement with the EU is not reached, an extension to a transitional period will need to be agreed to avoid the UK facing the same dilemma of crashing out in 2021. Although many companies have already put plans in place to deal with the UK exit from Europe, the reality for day-to-day operations is not one that any business relishes.
“Undoubtedly, a period of certainty that the new Tory government brings is most welcome and will give business more time to finalise their Brexit strategy. This would include plans for imports and exports; setting up an EU business establishment to deal with distribution and supply chains within Europe if necessary; registering for VAT in EU jurisdictions; and appointing human and capital resources.
“All UK businesses are already aware that they must obtain an EORI number through HMRC for importing from the EU post Brexit. However, given the complexities of international trade, careful preparation and the ability to grasp all the technical details involved with any new agreement will make or break many UK businesses.”