HMRC has recorded a message on its phonelines to reassure taxpayers that the EU referendum result of Brexit heralds no immediate changes to the UK's tax system.

HMRC's message is: "There are no changes to any taxes, tax credits, child benefits or other HMRC services as a result of the vote on the EU referendum. Everything is continuing as normal. No laws have changed. There is no need to contact HMRC as a result of the EU referendum."

In due course, as Brexit commences there will inevitably be changes to the UK's tax system. No major changes will apply for at least two years and thereafter it will take many years of renegotiation and consultation to create the new legislation that the Brexit supporters desire. Chancellor George Osborne has already announced that there will not be an emergency budget following the referendum.

Possibly the biggest headache for HMRC as the UK eventually leaves the Single Market of the EU will concern customs and excise duties. A raft of new systems and legislation will need to be put into place.

The second biggest issue may well be VAT. Ironically the EU was moving to make a more flexible system for member states and aiming for a consumer pays system to prevent fraud. The 'one stop shop' will disappear unless some kind of half-way house can be neogotiated, this will mean that a UK exporter to the EU will need to register separately in each country in which it trades. Some of the VAT measures in the UK's recent budget will now require adjustment as they are linked to the EU wide anti-fraud measures.

The UK has already started a race to the bottom in corporation tax rates and much of the work on tax avoidance by the large corporates is based on OECD BEPs project. The UK has always been free to set its own direct tax rates and going forward the whole question of direct taxes will depend on what happens to the British economy and what effect there may be in terms of damage if Scotland, Wales and Northern Ireland decide to vote for independence. 

Many legal precedents have been set by the EU courts not only for VAT but also for human rights. Once the UK is out of Europe these precedents can no longer apply unless the UK attempts to mirror the EU legislation. 

 

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