U.K. Businesses Ignore Scheme That Aids Post-Brexit Tax Plans

Trust Bloomberg Tax for the international news and analysis to navigate the complex tax treaty networks and global business regulations.

By Ben Stupples

Brexit has failed to prompt more businesses to seek certainty from the government on their cross-border taxes, stoking concerns about companies’ plans for the U.K.’s exit from the European Union.

The number of requests from U.K. businesses to guarantee the correct tariffs apply to their EU imports and exports hasn’t risen since Britain’s referendum in June 2016, a tax authority spokeswoman said. Every year, the government processes around 4,000 applications for Binding Tariff Information Rulings, with just over 25,000 active in the U.K., she told Bloomberg Tax in an April 27 email.

The statistics underline how some businesses are failing to prepare for the U.K.’s EU departure. In a survey of 300 companies, published January 2018, the Confederation of British Industry said that just over half had examined different Brexit scenarios and the subsequent commercial impacts.

“It’s human nature to wait and see what the rules are before putting plans into implementation mode,” Daniel Lyons, indirect tax partner at Deloitte LLP, said in Bloomberg Tax’s April 25 webinar on Brexit. “But, with Brexit, I’m afraid that the most cautious and sensible thing to do is prepare for what the least good scenario, which is leaving the EU on WTO terms.”

Valid for Three Years

Typically valid for three years across EU member nations, Binding Tariff Information Rulings (BTIRs) give multinational companies more certainty over the tariffs that apply on their imported or exported goods. In addition, they can help businesses to work out export refunds and custom duties.

BTIRs featured as a topic of discussion in Bloomberg Tax’s webinar, which focused on indirect tax and operational issues for multinational businesses arising from the U.K.’s departure from the EU.

Companies should consider BTIRs as part of their Brexit preparations due to the certainty they can provide, said panelist Simon Sutcliffe, indirect tax partner at accounting firm Blick Rothenberg.

“That said, many firms I speak to have not heard of it,” he said in an April 27 email, suggesting reasons for the lack of growth in the U.K.’s BTI requests. The government has “a publicity issue.”

U.K.’s EU Exit Process

The U.K. will leave the EU at the end of March 2019. Last month, the U.K. and EU’s Brexit negotiators struck an agreement for the country to have a 21-month transition period following its departure.

The data on U.K. businesses’ use of BTIR comes as the EU considers a new form of the program in a consultation, launched in March 2018, that seeks input form companies and public authorities.

In the webinar, Sutcliffe said he expected the EU to recognize the U.K.’s BTIR system after Brexit.

A spokesman for the EU didn’t respond to Bloomberg Tax’s request for comment on the issue.

To contact the reporter on this story: Ben Stupples in London at bstupples@bloombergtax.com

To contact the editor responsible for this story: Penny Sukhraj at psukhraj@bloombergtax.com

Copyright © 2018 The Bureau of National Affairs, Inc. All Rights Reserved.

Request International Tax