First some important facts[1]: –

The sun will rise, and later in the day, set.  It will still be winter in the Northern hemisphere.   There will be bills to pay, lots of them, hangovers to nurse, and time will march on.   It will still be the case that anyone who wants to be a politician should be banned from being a politician.

What can the UK Do?

In short, whatever it wants.  A trick that both sides’ politicians seem to have missed.   For example, people said that EU citizens will have no rights in the UK. If we want to give them rights, and we have, then who can stop us? If we want to give work visas to the newly discovered life forms on Venus, we can.[2]

What about all those EU financial services business doing work in London.  Insurers, Axa, Allianz; brokers, banks, etc.   Is the UK really going to turn them all away?

No, in fact in April 2019 the Financial Conduct Authority said to all EU businesses which had a passport into the UK, that they could apply for a fast track registration to be fully UK authorised.

This is an example of what I call the “if the UK was happy with something from the EU on 31 December 2020, why should it be different on 1st January 2021?” approach.   This applies to food, electrical goods, indeed everything including Romanian sourced beef lasagne made 100% of horse meat.  Personally, I would have liked to have introduced matching customs, excise, anti-dumping rules etc for imports from the EU into the UK and let the rest of the world trade on WTO Terms.  Except that is not permitted by WTO terms.

What are WTO Terms?

A key principle is the most favoured nation principle, i.e. a country cannot offer better treatment to another country than it offers to any WTO member UNLESS THERE IS A FREE TRADE AGREEMENT.

To facilitate free trade, the WTO maintains the customs tariff code, a series of code numbers identifying every product category imaginable.   Tariff code 293991 is for …?

293991 – — Cocaine, ecgonine, levomet amfetamine, met amfetamine (INN), metamfetamine racemate; salts, esters and other derivatives thereof

Now you are probably thinking that the trade in cocaine is illicit, but there is a huge licit trade in cocaine.   And the world’s biggest consumer is …  the UK’s National Health Service (NHS).

So, an FTA means one can agree reciprocity of favours on a range of matters, for example commercial disputes over intellectual property rights and more.

The UK has asked for a Canada style agreement[3], but the EU have said no because

  1. The UK is geographically too close to the EU. (We did consider moving, but couldn’t be bothered)
  2. The EU rights of fish and
  3. Could we agree to abide by the EU rules in perpetuity? e. the opposite of Brexit, aka a level playing field.

What happens if there is no FTA?

The UK will be a “third country” in EU speak.  Outside the VAT and Customs Union.  Which means we can’t blame the EU for our VAT rates anymore, but we can lawfully have our super high VAT registration threshold of £88,000, (a little over €96,000).

In 2011, I was part of a team which surveyed our clients on the VAT Green Paper, which eventually led to the EU abandoning the origin system and sticking with the transitional destination principle.   That transition period was meant to be a short transition which started 1 January 1993.

The VAT Green Paper was a huge document.  A common theme appeared that EU businesses were organising their supply chains to move in and out of the EU as it was easier than doing an intra EU transaction!!!    On the basis of that evidence, all of us are better off!

To facilitate feedback, I instructed our teams to ask clients, what are the worst three things about the EU VAT system.    The most often given answer, and on the rare cases when it was not number one, it was number two, was “Italy”.[4]

Everything about Italy’s VAT system was the worst.

What does an FTA cover?

Well, depends but let us assume we follow CETA.  An FTA typically covers [5] a wide range of matters, not just tax, but commercial disputes, rules of origin, subsidies, anti-corruption and technical barriers, e.g. mobile phones in South Korea.

It is basically a “do our best to work together” so that people in our respective countries can trade together lawfully, safely, healthily, fairly, with the minimum of obstacles and unfair competitive practices.  Something France has struggled with.[6]

So, watch this space, or Twitter, or your private sector tax law provider for more reliable information than mainstream media.

Finally, a word on direct taxes.

The EU Directives on cross border mergers, royalties and interest, savings, parent subsidiaries, etc. ceased to have effect for the UK on 31 January.  Under the WA, the UK cannot introduce rules to deviate from them, but from 1st January 2021, subject to an FTA, the UK can do what it wants, subject to WTO Terms.  If you have a structure dependent upon EU protection, then you should review them.

The then Prime Minister, David “call me Dave” Cameron was very clear in his pro-Remain Project Fear campaign, if we vote to leave, we will leave on WTO terms.  To which 17.4m people, said, ok, let’s do it.

Cyprus is the most tax friendly place in the EU, and I am not just saying that, I can support it with hard data[7], but the big secret is that the UK is the best corporate tax haven in this time zone, (ignoring the weather) and the best tax haven for wealthy individuals (unless you were born here).[8]

How can you respond?

The politicians would have you think the world will end, that a new European war will break out (it already has, an undeclared economic war, which Germany is winning). Fear and uncertainty are their weapons of choice.

The winners will be those who ignore the fear, buckle down and provide what clients in your chosen market want at a price that they can afford.  And read the law, not just the pamphlet.


[1] For those of you with an interest in art, the picture is an artist hand embellished print of “Chime after Chime” by Tom Butler.  For further details contact Hayley Norman at

[2] We have had a lot of nonsense, e.g. Leo Varadkar’s “we will shoot down British aircraft flying over Ireland”.   With what?  The Irish air force has 7 aircraft, 4 fixed wing, 3 helicopters, and none of them carry any armaments.


[4] And on some occasions was first, second and third.

[5] Trade in Goods:

  • Sanitary and Phytosanitary Measures (SPS):
  • Customs and Trade Facilitation
  • Rules of Origin
  • Technical Barriers to Trade (TBT) – e.g. mobile phones and South Korea
  • Good Regulatory Practices
  • Transparency, Publication, and Administrative Measures
  • Trade in Services, Including Telecommunications and Financial Services
  • Digital Trade in Goods and Services and Cross-Border Data Flows
  • Investment
  • Intellectual Property
  • Procedural Fairness for Pharmaceuticals and Medical Devices
  • State-Owned and Controlled Enterprises (SOEs)
  • Subsidies
  • Competition Policy
  • Labour
  • Environment
  • Anti-corruption
  • Trade Remedies
  • Settlement
  • General Provisions
  • Currency

[6] See my blog post from last September where you can read about the Belgian Margarine wars and the Battle of Poitiers (1983, not the one in 732, also known as the Battle of Tours when a Frankish Aquitanian Christian leader, defeated the Muslim Caliphate of the Spanish Moors).   Plus ca change …

[7] For example, the availability of rulings, (Luxembourg and Netherlands have gone quiet on that), absence of withholding taxes, the IP Holding company, finance companies, etc.

[8] Unless you are in organised crime in which case you need Delaware, Wyoming or Nevada ( see Professor Michael Findlay’s excellent, amusing yet counter intuitive and scary publication of the results of his experiment Global Shell Games: Experiments in Transnational Relations, Crime, and Terrorism and for the UK’s role, a less neutral publication, by Nicholas Shaxon, Treasure Islands: Tax Havens and the Men who Stole the World ).

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