Much has occurred since the UK voted on 23 June 2016 to leave the European Union, but not much has changed. Since the referendum, the worst of the turmoil within the Conservative party has settled, as Theresa May has replaced David Cameron as prime minister and selected a new cabinet that includes the prominent Brexiteer Boris Johnson as Foreign Secretary. The next step for the May government was to hire scores of trade negotiators, the UK having been out of the business of negotiating trade deals since joining the EU.
Timing of the Brexit has been uncertain since the vote, and we are only slightly more informed now that Prime Minister May has announced that the UK will invoke Article 50 of the EU treaty by the end of March, 2017, which will trigger the two-year period of exit negotiations anticipated by Article 50, but which can be extended by the parties if so agreed. We would not be surprised to see the negotiations go beyond, and perhaps well beyond, that two year period. The first discussions around the Comprehensive Economic and Trade Agreement between Canada and the EU were held in 2007. That agreement has still yet to be ratified.
Not surprisingly, there is still a dearth of details available in respect of Brexit, including nothing on the tax front, with even the question of whether the UK will seek a so-called “hard Brexit” or a “soft Brexit”, in which access to the EU and its markets would largely be preserved, still uncertain. The reaction that will come from the EU is similarly uncertain, although many European leaders are saying fairly bluntly that the UK cannot “cherry pick” its rights with respect to EU access, Irish Finance Minister Michael Noonan for example having stated fairly categorically that the U.K. “cannot have the advantages of the European Union without carrying out the obligations.”
Meanwhile, life and business must carry on, and business decisions must be made even in this information vacuum. Taxanders both within and without the UK have been reviewing these matters with clients. We have the advantage that a number of Taxand countries carry out business lines beyond tax, including legal and business advisory activities. We will continue to update you on our perspectives, including sharing with you observations and advice from our legal and business advisory colleagues.
To that end, the perspectives at the link below, recently prepared by our colleagues in London together with the Henley Business School at the University of Reading, evaluate Brexit using the ‘Extraordinary Disruption framework’ designed in earlier research that they conducted. During the July to September period they interviewed 20 seasoned UK board members and private equity specialists with the objective of understanding how they are reacting to the post-Brexit world. It is an interesting read.
Discover more > Boards in challenging times – extraordinary disruptions
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