Brexit

 


With a no-deal Brexit appearing increasingly likely, HMRC is now warning that, in that event, 245,000 businesses would face a tsunami of new customs declarations, tariffs and VAT obligations after 29 March.

The most significant Brexit-related development of the week was a series of votes in the House of Commons on amendments to an anodyne government motion, which gave different groups of MPs a chance to suggest alternative ways forward on Brexit. The key results were that Parliament failed to ‘take control’ of the Brexit process from government, and MPs indicated that the withdrawal agreement could get parliamentary support if the Irish Border backstop is replaced with something more acceptable to MPs. With the EU repeating its opposition to reopening the withdrawal agreement this will not be achieved easily. There is, however, increasing speculation that compromise might be possible – with both the EU and Labour – around a UK-EU customs union.

The government continues to lay Brexit-related statutory instruments (SIs) in preparation for a possible ‘no deal’ exit from the EU, including a number in the tax area. Since the start of 2019 six VAT-related SIs have been laid, plus three relating to Excise Duty and one relating to Customs.

MPs on a delegated legislation committee have approved three statutory instruments (SIs) establishing a customs union between the UK and three Crown Dependencies (Jersey, Guernsey and the Isle of Man), following less than 20 minutes of debate.

The draft Withdrawal Agreement published on Wednesday sets out the terms of the UK’s exit from the EU, including a Protocol on Northern Ireland. It reflects agreement in principle between the UK and EU negotiating teams on the full legal text. The government intends to lay a final version of the agreement before Parliament once it is finalised. The outline of the Political Declaration on the future relationship sets out progress on the scope of the framework for the future relationship. Negotiations are ongoing to finalise the Political Declaration.

The Chartered Institute of Taxation held a roundtable on Customs and Brexit, in Parliament, earlier this month. Glyn Fullelove, Deputy President, Chartered Institute of Taxation (CIOT), chaired the meeting and the parliamentary sponsor of the event was Kirsty Blackman MP.

The House of Lords External Affairs Sub- committee held the final two evidence sessions of its inquiry into Brexit and customs arrangements last week (July 19). In the first session evidence was given by Jon Thompson, Chief Executive, HMRC and Jim Harra, Deputy Chief Executive, HMRC. In the second session Financial Secretary Mel Stride and DExEU minister Robin Walker were the witnesses. The Chairman of the committee is Baroness Verma. Most of the questions related to the White Paper in which the Government outlined a facilitated customs arrangement (FCA).

The House of Commons has passed a motion calling on the Government to include the establishment of an effective UK-EU customs union as an objective in Brexit negotiations. The motion was passed without a vote after the Government instructed its MPs to abstain and most opponents of such a customs union stayed away. (The full motion appears at the bottom of this report.)

 

The Government have been heavily defeated on a cross-party amendment to the EU (Withdrawal) Bill calling for them to explore a customs union with the EU, during report stage in the House of Lords.

Eighteen peers took part in a debate on a motion to take note of the future of United Kingdom trade and customs policy in the light of two recent white papers (Preparing for our future UK trade policy (Cm 9470) and Customs Bill: legislating for the UK’s future customs (Cm 9502)).