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The new Secretary of State for Exiting the European Union, David Davis, has recently indicated that formal Brexit negotiations could begin by the start of 2017 - so what could this mean for UK businesses?
It is important to note that in the short to medium term (until 2018 at least), there will not be any changes to tax and employment laws as a result of the vote.
However, once Britain's withdrawal is complete, VAT (which is operated in line with EU law) could be subject to some significant reforms. In theory, the UK could even decide to replace VAT with a sales tax on goods and services, although many experts agree that this is highly unlikely.
The UK currently faces restrictions from the EU over its ability to reduce VAT rates on certain goods and services such as domestic fuel and power. If the UK is no longer obliged to comply with the EU VAT Directive, the UK Government could choose to amend the legislation to apply different rates to goods and services without constraint.
If VAT were to be applied to items that were previously exempt, or if there are changes to the rates of VAT, the financial implications for business could be sizeable. Some commentators have also argued that potential changes to VAT law could lead to more obligations and complexities, and business owners may need to invest time and money adapting their procedures and processes accordingly.
The potential restrictions on the free movement of goods between the UK and its EU neighbours could also trigger significant changes to how businesses import and export.
For example, currently when a UK firm buys goods from an EU business it makes an 'acquisition'. The transaction does not result in any VAT being payable - a book entry in a VAT return being the only consequence, unless the UK business makes exempt supplies. However, following Brexit, the transaction is likely to be treated as an 'import' and import VAT would be paid to HMRC at the time of importation. Although this would be reclaimed by the business on the next VAT return (unless the business makes exempt supplies), the changes could have implications for the firm's cash flow.
Once Britain leaves the EU, the UK Government could have greater control over business reliefs such as R&D tax credits for SMEs, which currently have constraints placed upon them due to EU State Aid rules. Britain may also gain more flexibility over the rules governing the Enterprise Investment Scheme and Venture Capital schemes.
With much employment legislation derived from Brussels, concerns have been raised over whether this is another area that could be open to reform. However, while the UK Government could choose to amend working rights, many experts have suggested that significant reforms are unlikely.
In a recent blog on the Conservative Home website, David Davis suggested that he will seek to cut red tape with the aim of making 'Britain a better place to do business'. He claimed the 'regulation already in place will stay for the moment,' but he added that the 'flood of unnecessary market and product regulation' will be halted. With fewer regulations to comply with, this could be good news for business owners.
With a new Prime Minister and Chancellor at the helm, there could be significant changes to Britain's economic and fiscal policies in the months and years ahead.
The Government has already axed its plans to achieve a budget surplus by 2020, while the former Chancellor George Osborne suggested that corporation tax rates could be cut further to encourage investment. Of course, this may now change following the appointment of the new Chancellor, Philip Hammond, although we will have to wait until the Autumn Statement for further details on the Government's latest economic strategy.
The dust may be settling on the EU referendum result, but there is still much that remains unknown about the future of UK tax and employment law. What is clear, however, is that all eyes will be on the new Chancellor when he delivers his Autumn Statement later this year. Whatever happens, we will be happy to advise you on any issues that may arise.