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You can’t ignore Europe

by
29th Mar 2017
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Today is the day that Britain hands in a letter either condemning itself to a long, cold winter or a glorious sunny summer.

Over the last nine months, it has become apparent that accountants are divided over the likely consequences of the momentous vote last June.

Rather than fire up further debate at the start of two years that will change all our lives irrevocably, this column will keep things simple by identifying a few key issues.

To start with, it is pleasing that Theresa May seems keen to represent everybody in the country. However, given the wide range of opinion within her own party, indeed her own government, this seems like little more than empty rhetoric.

However, we shall see how she helps to mollify those who would prefer to remain in the current system, while at the same time pleasing the hawks who would like a complete break.

In any event, the issues that are likely to make a big difference to our futures might be summarised as follows:

  1. The Prime Minister refused to guarantee the continuing residence of European nationals. This factor was probably the primary reason that the Leave campaign was successful but could damage businesses. Indeed, a recent lunch with a number of partners in firms of all sizes, the ability to get high quality staff was expressed as a very serious concern, given that so many of their employees were European nationals
  2. Negotiations on maintaining tariff-free access to European markets. This may affect accountants less than, for example, manufacturing but the knock-on effect if it fails could be damaging
  3. Access to European markets. Once again, many accountants will probably do little work with those on the far side of the Channel. However, our clients do and if they do camp or go bust, that can’t be good for business
  4. It will be important to determine the size of an exit charge, if any. Those that wanted out and were less concerned about immigration tended to dislike European bureaucracy and its cost. Therefore, there are likely to be enthusiastic about paying £50bn or more to take the final step. However, Europe is unlikely to react favourably of Britain seeks to escape its financial obligations citing a clever interpretation of the small print

This last point has a close parallel in the government’s current attitude to what it likes to call “abusive tax avoidance”. Those that seek to use loopholes to minimise tax liabilities are now regarded as little short of criminals, when in many cases they have complied with the letter of the law.

Regrettably, this is unlikely to be the last column about Britain’s departure from Europe in coming weeks and months.

Replies (3)

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FT
By FirstTab
29th Mar 2017 20:33

"Those that seek to use loopholes to minimise tax liabilities are now regarded as little short of criminals, when in many cases they have complied with the letter of the law."

Yes, but they have not complied with the substance of the law. Their job is to look for the loopholes in the law to justify their partnership status and a fat partnership income. In my eyes it makes them Pin Stripe Mafia. Big accountancy brand name gives them a misperception of decency and an air professionalism/status. They should be made social outcasts to stop the damage that is caused.

Thanks (0)
By mrme89
30th Mar 2017 15:38

The problem is though, First Tab, the political tax avoidance brush is getting bigger. Those using the flat rate scheme, or OMB's paying dividends, for example, are branded 'immoral' and 'aggressive'.

Thanks (1)
Replying to mrme89:
Locutus of Borg
By Locutus
30th Mar 2017 16:17

mrme89 wrote:

The problem is though, First Tab, the political tax avoidance brush is getting bigger. Those using the flat rate scheme, or OMB's paying dividends, for example, are branded 'immoral' and 'aggressive'.

I agree. Use of the Flat Rate VAT scheme has been described as "aggressive abuse" in HMRC's Autumn Statement press release.

https://www.gov.uk/government/publications/tackling-aggressive-abuse-of-...

How can use of a VAT scheme promoted by HMRC, by those it was specifically aimed at (i.e. micro businesses) ever be deemed as "aggressive"?

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