Brexit Uncertainty Grows
On November 26, a legal challenge brought by 13 UK expats against the decision of the EU Council to endorse the start of negotiations with the UK on exiting the European Union was rejected by the General Court of the EU. So is Brexit now an unstoppable force? Perhaps the only question left is what sort of Brexit will it be? Prime Minister May’s EU-lite? Canada +++? The Norway option? WTO rules?
The possibility of another referendum on the matter remains, although the chances are slim. What is crystal clear however, is that the waters are now as muddy as ever. So much so that businesses have largely given up attempting to plan for Brexit. At least, that is the conclusion drawn from a survey by accountants Moore Stephens of Brexit preparedness within the business community.
According to the firm, since last year’s survey, fewer businesses reported having a plan in place to respond to Brexit: 25 percent, rather 56 percent a year ago, with many businesses said to have been deterred from planning extensively due to uncertainty concerning the implications of Brexit.
The firm noted that if the UK does not reach a deal on an orderly withdrawal from the European Union, there will be no transition period that would effectively extend the UK’s EU membership until the end of 2020. A transition period would allow time for businesses to prepare, but if no deal is reached the UK will cease to be an EU member state instantly from March 29, 2019. And how does one plan for an outcome that it to a large extent unknowable?
Still, even though there are less than four months to go before the Article 50 clock stops ticking, it is difficult as things stand to look beyond December 11. This is when the UK Government will put its EU withdrawal agreement to parliament, and looks set to be the moment when all political hell breaks loose. At least this might give us some clues as to what sort of Brexit we are not going to see.
For more information on this, and other topical international tax matters, please visit: https://www.cchgroup.com/roles/corporations/international-solutions/research/global-tax-weekly-a-closer-look