You may have played the game “The Prisoner’s Dilemma” where two people have to decide whether to trust each other or not and see if one person can get a better deal than the other.
A game similar to this has been played ever since the Brexit negotiations started. I suspect that for many years after the Brexit process has finally finished, people will study it as an object lesson on how to conduct negotiations or not as the case may be.
One of the reasons why it was so difficult to obtain Parliamentary approval for any course of action from 2017-19 was that each faction felt it could win on its own terms within the House of Commons. Those who wanted Brexit overturned felt that the easiest way of facilitating that was to oppose all deals. The faction proposing a close Brexit but with a very close alignment e.g. EEA/EFTA which would have meant membership of the Customs Union and or the Single Market felt that they could push Parliament towards this. There was another strand of opinion which supported the May withdrawal agreement and then a further strand of opinion which wanted a much looser arrangement with the EU.
The likelihood is that if the first three factions had agreed a common platform which would have required compromise on their part then, the UK would have been in very close alignment with the EU on issues such as tax, regulation and standards. However, they overplayed their hand and the 2019 General Election result brought to power with a large majority the grouping that wanted a more distant relationship with the EU.
The choice now is between a Canada style agreement or an Australian agreement based on WTO terms. Both of these scenarios are a large distance away from what was envisaged in the aftermath of the referendum by the majority of MPs and commentators.
The acceptance by the Johnson government that “friction” at the borders is a necessary price to regain sovereignty over issues such as tax and regulations as well as trade policies means that the break on the 1st January 2021 will have wider consequences for business than had previously been envisaged.
Primondell is running a number of seminars on the consequences of the end of the transition period.
For further details please contact Jeremy Mindell at email@example.com
The ongoing BREXIT debate has seen many people feel exasperated at the workings of Parliament. The endless bickering and point scoring as well as shouting turns many people off whether they are Remainers or Leavers.
I beg to differ: this is an undoubtedly difficult process, whatever standpoint you come from, and it is hardly surprising that Parliament has struggled to find a way of dealing with all the interrelated issues that the U.K.’s withdrawal from the EU entails. It reminds me of a Rubik’s cube. I find it encouraging that members of Parliament are prepared to look at the details and consequences of their decisions. Whether you like their decisions or not, there is no doubt that they have been subject to scrutiny.
By contrast the tax decisions which go into the annual Finance Bill seemed to excite much less attention. There is a little bit of political grandstanding when it comes to producing reports asking for the impact of a particular measure; but there is little detailed scrutiny of clauses until it is too late.
It is perhaps instructive that MPs are raising issues about the loan charge when it is about to come into effect rather than when the legislation was first proposed.
It is almost always the case with legislation that when it is not properly scrutinised it ends up being bad legislation. It has been noticeable how recent Finance Bills have passed through Parliament with fairly limited changes, despite the government not commanding an overall majority. It appears that the scrutiny which Parliament should apply to tax measures has been lacking– drained by the overwhelming attention on BREXIT.
Someone once asked me whether there was anything worse than Parliament in one of its fractious debates. I would reply that at least Parliament is doing its job. When it passes legislation with minimal scrutiny, bad laws result.
This year in particular, the world is dominated by deadlines. In the UK the BREXIT deadline of 29 March looms large in both the political and economic spheres.
In the tax world, 31 January has loomed large for over two decades. Some have questioned the importance of deadlines but over many years of practice, I’ve come to the conclusion that if you do not set a firm deadline for something that people are reluctant to do, they will put it off indefinitely.
The UK gives just under 10 months for the completion of a tax return, which is considerably more generous than say the US which gives 3 ½ months. Other jurisdictions give even less time to complete the tax return. If the UK moved to say 31stOctober or 30thNovember deadline, I suspect that the numbers who would be late would be similar to 31 January. Conversely if the UK moved the deadline to 31 March, I suspect the numbers of defaulters would again hardly change.
The old saying of work expands to fill the time available has never been so appropriate as to when it comes to tax affairs. Indeed, a person who completes their tax return promptly probably has less opportunity to lose all the tax -related documents which are sent to him or her in early April. The logical position is to complete the tax return as soon as possible after the end of the tax year because that also gives individuals the opportunity to tax plan for the current year. However, the number of individuals who do this is regrettably small.
This comes back to the main purpose of deadlines which is to force people to take actions or make decisions that they would otherwise put off. In this context, the suspicion regarding the pleas to delay BREXIT are that some of its proponents regard the impending departure of the UK from the EU in the same way that they regard the requirement to complete the tax return. Without a date being mandated, tax returns would not be completed and I suspect the UK would never leave the EU.