‘Sufficient progress’ claimed in Brexit talks while businesses call for clarity

The European Commission is satisfied that “sufficient progress has been achieved” on three priority issues in phase 1 of the Brexit talks, the commission announced on December 8, while questions remained about the implications of commitments given regarding Northern Ireland.

It is now for the European Council to decide at a December 15 meeting whether the negotiations should proceed to their second phase, the commission said, adding that its assessment, set out in a communication to the European Council (Article 50), was based on a joint report agreed by negotiators and endorsed by UK Prime Minister Theresa May and Commission President Jean-Claude Juncker.

My news story for Tax Analysts, December 8 (paywall)

UK legislates for stand-alone customs regime and VAT changes

A bill to lay the foundations for a stand-alone, post-Brexit customs regime will help ensure “that goods can move smoothly and safely in and out of the UK, and that everyone pays the right tax,” the government said, a week after a parliamentary committee warned that failure to establish a Brexit-ready system would be catastrophic.

The 170-page taxation (cross-border trade) bill, formerly known as the customs bill, will allow the UK to set and collect its own duty on goods entering the country and to implement different outcomes of the Brexit negotiations, including an implementation period, HM Treasury and the Department for International Trade said in a joint release on November 21.

My news story for Tax Analysts, November 23 (paywall)

UK lawmakers debate EU withdrawal bill

The UK government stressed its intention to preserve the UK’s constitutional integrity while avoiding the creation of a hard border with Ireland, as members of the House of Commons began detailed scrutiny of the European Union (Withdrawal) Bill.

James Brokenshire, secretary of state for Northern Ireland, has stressed that the government intends to “avoid any physical infrastructure” on the land border between Northern Ireland and the Republic of Ireland. “We welcome the European Commission’s commitment to this as an important step forward,” he told members of Parliament on November 15.

My news story for Tax Analysts, November 16 ($)

HMRC will recruit up to 5,000 extra staff to prepare for Brexit

HM Revenue & Customs will recruit up to 5,000 additional staff in 2018, the UK government said less than a week after HMRC Chief Executive and Permanent Secretary Jon Thompson told a parliamentary committee that the department was planning to review its priorities in the light of uncertainty created by Brexit …

“Alongside the negotiations in Brussels, it is crucial that we are putting our own domestic preparations in place so that we are ready at the point that we leave the EU,” a spokesman for Prime Minister Theresa May said after [an October 31 cabinet meeting]. “Cabinet heard many of these will be needed even in our preferred scenario of a bold and ambitious deal — for example, implementing either of our proposed customs arrangements will require investment in new systems and customs officers by HMRC.” Read more:

My news story for Tax Analysts, November 1 ($)

HMRC can’t guarantee Brexit-ready customs service, Thompson says

HM Revenue & Customs will review its priorities early next year and may need up to 5,000 additional staff to secure successful delivery of a new customs service if the UK leaves the European Union without a customs agreement, according to HMRC Chief Executive and Permanent Secretary Jon Thompson.

Announcing on October 12 an inquiry into Brexit and the future of customs, the House of Commons Public Accounts Committee noted that HMRC was due to complete a five-year program for a new customs declaration service (CDS) by early 2017. Delays have meant that the CDS will not be fully operational until January 2019. Significant work is still required to meet the revised target, a National Audit Office report found in July …

My news story for Tax Analysts, October 30 ($)

Public accounts committee, oral evidence: Brexit and the Future of Customs

Brexit bill ‘unclear in scope and effect,’ UK tax body says

The “abuse of rights” principle against artificial VAT avoidance could be removed retrospectively by the UK’s Brexit bill as currently drafted, and the apparent error illustrates how the bill goes “beyond what seems necessary” to leave the European Union, according to the Chartered Institute of Taxation.

“The government has been clear that its intention is to provide legal continuity during Brexit by copying over the entire body of EU law onto the UK’s post-exit statute book. This is a sensible aim,” said Jeremy Woolf, chair of the CIOT’s EU and human rights subcommittee, in an October 25 release. “However, as currently drafted, it appears to us that this will not be the case …” Read more:

My news story for Tax Analysts, October 26 (paywall)

OECD recommends UK tax reform amid Brexit uncertainty

Uncertainties created by preparations for Brexit in 2019 will continue to weigh on the outlook of the UK economy until those uncertainties are resolved, said OECD Secretary-General Angel Gurría while presenting the think tank’s annual U.K. survey, which recommends increasing taxes on the self-employed.

The UK economy has weakened in the aftermath of the June 2016 vote to leave the European Union, the OECD noted, adding that the June 2017 general election led to a hung Parliament and further uncertainty. “In case Brexit gets reversed by political decision (change of majority, new referendum, etc.), the positive impact on growth would be significant,” states the OECD’s 2017 economic survey of the United Kingdom.

The government dismissed any suggestion of a second Brexit vote, however. “We are leaving the EU, and there will not be a second referendum,” a spokesperson said in an emailed statement, adding that the government is “working to achieve the best deal with the EU that protects jobs and the economy.” Read more:

My news story for Tax Analysts, October 18 (paywall)

HMRC flags potential costs of Brexit contingency planning

Uncertainty over the outcome of negotiations on the UK’s post-Brexit customs arrangements may force HM Revenue & Customs and traders to incur expenditure that could turn out to be unnecessary, officials told the House of Commons Treasury Committee September 14.

Committee Chair Nicky Morgan asked Jim Harra, HMRC’s director general for customer strategy and tax design, when he would need to know the outcome of negotiations with the EU-27 countries, which have not yet begun, to be able to start “putting things in place.”

“We’ve been advising the Department for Exiting the European Union and advising ministers on what the choices are . . . and the future partnership paper has been produced,” Harra said. The UK government’s proposals for a future customs relationship with the EU, published August 15, outline two broad approaches … Read more:

My news story for Tax Analysts, September 15 (paywall)

UK lawmakers approve finance bill as Brexit overshadows debate

Members of Parliament approved the UK’s second finance bill of 2017, voting 320 to 299 after six hours of debate at the bill’s second reading September 12.

The bill will now proceed to its committee stage in October, after a three-week recess for the annual political party conferences. It is expected to become the second finance act of 2017 in November. Read more:

My news story for Tax Analysts, September 14 (paywall)

Parliament website: Finance Bill 2017-19

Women in Tax set tone for better UK policy decisions

The Brexit vote has presented U.K. lawmakers with a “once in a generation” opportunity to improve the tax system, a leading tax expert told participants at a debate held by the Women in Tax network in London two days before Donald Trump’s election victory added further uncertainty to the tax landscape.

Panellists shared their personal views on how a better tax system can be achieved. U.K. tax policy measures often have very vague goals, said Jill Rutter, program director for the Institute for Government think tank.

Read more: My news story for Tax Analysts, 10 November (paywall).

New UK chancellor stresses commitment to reduce corporate tax rate

The UK economy is well placed to respond to the “shock” of last month’s EU referendum decision, newly appointed chancellor of the exchequer Philip Hammond told members of Parliament, saying that the government is committed to ensuring that the UK has a competitive corporate tax system that encourages innovation and business investment.

“We have already announced a reduction in corporation tax to 17 percent – the lowest rate in the G20 – and we are reducing the [property tax] business rates burden by £6.7 billion,” Hammond said July 19. He made no reference to his predecessor George Osborne’s aim, reported in the Financial Times shortly after the Brexit vote, to set a long-term target of less than 15 percent for the corporate rate.

Read more: My news story for Tax Notes, 22 July (paywall) published by Tax Analysts.