No-Deal Brexit Fears Loom

By Global Tax Weekly

As far as taxation goes, preparation and planning have long been integral to a successful business or investment strategy, no more so than in today’s post-BEPS, uber transparent world. The tax headlines are littered with seemingly well-prepared companies with well-staffed tax departments, embroiled in long, expensive disputes with the tax authorities. So woe betide any taxpayer who jumps into the world of international trade and commerce without having given thought to the tax consequences.

However, sometimes taxpayers can find themselves in an impossible position, planning for outcomes that are unknown. In Europe, both the United Kingdom and the European Union have been urging businesses to prepare for the possibility of a no-deal Brexit. Which must be a bit like asking them to plot a course on a map which has had all the names of the roads, towns, and cities deleted. You’ll end up somewhere, but goodness knows where!

Both camps are reassuring businesses that it won’t come to this worst-case scenario, and that some kind of trade agreement will be reached before the Article 50 countdown reaches zero on March 29 next year. But such an outcome is looking increasingly optimistic. I don’t want to plunge into the more general debate about the merits of Brexit in the first place. Besides, I haven’t brought my flak jacket. But surely, if achieved, this trade deal would win some sort of world speed record. Bilateral and multilateral trade negotiations tend to be slogs rather than sprints (it’s no coincidence that former WTO Director General Pascal Lamy was a marathon runner). And neither camp looks particularly well-prepared to undertake such a feat. Funny that isn’t it? Business are being asked to prepare for something that governments are largely unprepared to deliver.

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