Tom Moore CTA
The results are in. And despite polls indicating that the UK would remain in the EU, the Leave campaign was ultimately successful in securing an exit vote.
The initial impact has been significant, with both the resignation of David Cameron as Prime Minister and the tumbling of the pound to 30-year lows. But leaving short-term turbulence to one side, what will Exit mean for the UK and for our tax system in particular?
In truth, at this stage it is simply not possible to say with any certainty, though we broadly know the options:-
If we wish to continue with full access to the EU’s internal market the UK will remain subject to much of the EU’s regulations and laws as price for entry, as is the case with Norway and Switzerland. Once in place, this would likely result in little practical or economic change for the UK – essentially “Brexit lite”. While the UK remains subject to the laws of the EU many of the advantages that this affords from a tax planning perspective – such as the availability of anti-discrimination arguments against transfer of assets abroad rules, reliance on the freedom of movement of capital, and other matters – could well remain available to advisers.
The alternative would be for the UK to accept that access to EU markets will be restricted, in exchange for less EU law and regulation – the implications of which are much harder to determine. This is in many respects much more of a gamble, but given the Leave campaign’s heavy focused on migration, adherence to the principle of free movement of people is likely to be highly controversial. If the UK were simply to “opt out” entirely, this would result in much more radical change, and much of the tax planning making use of EU jurisdictions could face significant challenge in the future.
Only the negotiation process will determine which side will win out. All we can say for certain at this stage is that the UK will be exiting the EU, the process itself is likely to take a number of years and the resulting implications are yet to be decided.
We – like many others – will continue to monitor the position with great interest, and will update you further as developments arise.