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Glasgow
+44 (0)141 221 2984

Edinburgh
+44 (0)131 225 6366

Stirling
+44 (0)1786 451745

Dumbarton
+44 (0)1389 765238

Hamilton
+44 (0)1698 459444

French Duncan

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Brexit – Deal or No Deal, and a game of Chequers

What are the latest developments?
As it currently stands, the UK is set to leave the European Union (EU) at 11pm on Friday 29 March 2019.  Based on the position of the current UK Government, this will mean that the UK will no longer be part of the Single Market or Customs Union.  This raises questions as to how this will affect UK businesses and consumers, including any potential impact on the land border between Northern Ireland and Ireland. 

Due to the fact that there are many issues yet to be agreed between the UK and the EU, including their future trading relationship, the Government has published a series of technical papers in the event of a ‘No Deal’ Brexit.  HMRC has also issued letters to VAT registered businesses outlining the main changes to VAT and customs, were the UK to leave the EU without a deal.

What are the UK Government’s proposals?
The UK Government’s White Paper “The Future Relationship between the United Kingdom and the European Union” (the Chequers Deal), contains proposals for a future Economic Partnership.  This affirms the Government’s position to leave the Single Market and Customs Union. 

However, in respect of trading with the EU, the UK Government has proposed that there should be “frictionless access at the border to each other’s market for goods”.  This would involve establishing a free trade area for goods to eliminate the requirement for customs declarations or import tariffs.

Whether the UK reaches a deal with the EU on the outstanding issues remains to be seen, although current media reports indicate that the EU leaders are not looking favourably on the Chequers Deal as it stands.  Furthermore, any final agreement will still need to be ratified by UK Parliament. 

No Deal?
Currently, when goods are traded between the UK and the EU, they are free to move across borders without tariffs being applied, or the need for customs declarations, although statistical reporting, such as Intrastat or EC Sales Lists are often required.

Main Changes
If the UK leaves the EU without a deal, then goods moving between the UK and the EU will be treated as third country imports and exports.  Customs declarations will be required and in addition, import duties will become due on many goods imported from the EU.  Likewise, goods exported from the UK will become subject to import duty and customs requirements when entering the EU.  Safety, security and import/export licensing requirements will also be an additional consideration.

One change likely welcomed by businesses is the introduction of postponed accounting for import VAT.  This should alleviate potential cashflow concerns.  VAT registered businesses would not need to pay VAT at import (customs duties would still be due) but instead, would account for import VAT on their VAT return.  Interestingly, postponed VAT accounting would apply to the import of goods from both EU and non-EU countries.

One significant outstanding issue is the land border between Northern Ireland and Ireland.  By the UK leaving the EU and Customs Union, this may, by default, create a customs border.  In a bid to reassure those potentially affected, the UK Government has stated its commitment to ensuring that no ‘hard border’ is introduced following Brexit.  More work is still required in this area and will involve further negotiations between the UK, Ireland and the EU. 

Other VAT Changes
Other changes to the UK VAT system in the event of a No Deal are summarised as follows:

  • EC Sales Lists and Intrastat declarations will become obsolete.
  • Low Value Consignment Relief will no longer apply - import VAT will be due on imported parcels regardless of their value.
  • Distance sales rules will be abolished.  Goods sold from the UK to EU consumers (B2C sales) will be treated as exports.  Conversely, B2C sales of goods to the UK will become imports.
  • EU Wide IT systems – the UK will no longer be part of the Mini One Stop Shop (MOSS).
  • EU VAT Refund system – UK business will no longer be able to use this system and instead will have to consider using the process for non-EU businesses.

What next?
Whether there is a final deal reached on the UK leaving the EU should become clearer in the coming weeks and months.  There will likely be continued political wrangling on this issue; there have even been calls for Brexit date to be extended, in order to allow time for a more detailed agreement.

Even although there is still uncertainty surrounding Brexit, the recent technical notices on a ‘No Deal’ Brexit should help businesses and individuals to set some parameters for contingency planning. 

This is a good opportunity for businesses to reconsider how Brexit, including a ‘No Deal’ scenario, could impact on their operations.  If not already done so, businesses should review their supply chains to assess the extent they will be affected.  For instance, could goods become subject to import duty or have licensing requirements?  Businesses should also consider the mechanics of importing or exporting, particularly if they have not previously traded with non-EU countries. 

There are solutions available to businesses to mitigate the potential impact of Brexit. There are a range of approved customs storage and processing regimes that can aid cashflow.  Importers or exporters seeking fast-track customs clearance or a reduction in security or guarantees could seek Authorised Economic Operator (AEO) status, although this involves a lengthy application process.

French Duncan plan to issue further updates on Brexit once the future trading arrangements between the UK and the EU become clearer.  In the meantime, should you wish to discuss how Brexit could impact on your business, please get in touch with our VAT team.

The Changing Employment Tribunal Landscape

As you may well be aware, the employment tribunal landscape has been a bit like a game of ping pong in the last 5 years – first it’s free to raise a claim, then it’s not, then it’s free again.  This blog considers the changes and the benefits and drawbacks of the current status quo.

Employment tribunals are by no means a new concept, having been around since the 1960s.  However, in an increasingly litigious society, they gradually became common place in employment and the volume of spurious claims became unmanageable for the employment tribunal system.  It was felt that there was no deterrent against disgruntled employees to raise a claim, however frivolous it might be.  As a result, in 2013, employment tribunal fees were introduced meaning employees had to pay £1,200 in most cases to have their day in court – unsurprisingly we saw a sharp decline of nearly 70% in the number of claims and the employment judges were all able to breathe a sigh of relief at their more manageable workload.

However, in the period from 2013 onwards, there were rumblings the new regime was a barrier to justice, particularly from the employee union arena, and in the end the debate was settled and tribunal fees were once again abolished in July 2017.  In the last year, there has been an inevitable spike in tribunal claims with latest figures showing this is as much as a 90% increase.  In addition, the average cost of a claim for an employer is rising year on year and is currently around £16,500, not to mention legal fees, management time and potential reputational damage.

Whilst there was a collective groan from employers and HR professionals across the UK when the fees were abolished, let’s not forget the purpose of the employment tribunal system.  The balance of power in an employment relationship is weighted towards the employer in the main – the employee is reliant on the employer to provide work so they can pay their bills and earn a living.  Nine times out of ten, employers treat their employees fairly but we have all heard news stories of rogue employers… In this scenario, most people would agree it is right and proper the employee should not have to fork out a four figure sum to seek recompense for genuinely poor employment practices.  One could argue that a solution to the over-subscribed tribunal system could have been to consider lowering the fee levels or looking at a means tested approach, but as we know, this was not the decision taken as a conclusion to the legal challenge.

Many employers feel that the changes to tribunal fees take us back to the days of treading on egg shells with employees in a world of employment red tape.  The relatively short period of employment tribunal fees significantly reduced the number of frivolous claims seen inside an employment tribunal court, and we have once again, taken a step backward by abolishing the fees, in fact, claim numbers are at their highest level since the introduction of fees. 

Whilst tribunal fees appear to be here to stay, it is not all doom and gloom - employment tribunals can be avoided with good employment practices, including making sound decisions in relation to employees and having compliant policies and procedures.  In the light of the changing landscape with employment tribunals, it is recommended employers ensure compliance with employment legislation and HR best practice and take specialist advice on either an ad hoc or an ongoing basis.  For more information on how French Duncan can support you with HR, please contact us on 0141 221 2984 and we will be happy to discuss this further.

Pension Scams are evolving – useful tips to protect yourself

In truth, it is probably impossible to prevent all scamming completely, but we can and should narrow the open goal presented to scammers by the current occupational pension regime. Pension scams can be hard to spot and the scammers are evolving by being articulate and financially knowledgeable, with credible-looking websites that can make it difficult to differentiate the good from the bad. 

A scam is a confidence trick that attempts to defraud a person after first gaining their confidence. It then exploits natural human characteristics. Pensions are the perfect target for scammers as most pension scheme members have low confidence and understanding of their pension. It is therefore essential to raise awareness on all scams, but pensions in particular, where knowledge levels are generally so low.

To prevent yourself from being lured into a pension scam there are a number of trigger points to be aware of, especially when considering transferring out of Defined Benefit Schemes (also known as Final Salary Schemes). These are a selection of the main ones for you to consider:

  • Being contacted out of the blue (cold calling) about a pension opportunity and subjected to a ‘hard sell’
  • Being told that the transfer values of your pension will be due to change shortly, especially with the recent increase in interest rates, and that you need to take action before they do
  • Being rushed or pressured into proceeding with any pension transfer quickly
  • Being aware that you are giving up on a protected income at retirement to invest in potentially higher risk than is suited to your attitude to risk

These are only a few trigger points for you to be aware of.

In order for you to have the peace of mind that you are receiving correct advice that is most suited to you and your needs, it is important for you to carry out due diligence or background checks on your selected financial adviser. This can be done by checking the FCA register to see that the firm and the individual is authorised to give this specialised advice. Seeking advice from a Chartered Financial Planner ensures that you are dealing with advisers qualified to the highest degree with the highest level of ethics; alternatively perhaps consider being referred to a firm previously used and trusted by a friend.

You may also wish to refer to the FCA’s new Scam Smart website (www.fca.org.uk/scamsmart), which is designed to provide a general ‘sniff test’ on any unusual investments being proposed and to assist you generally with recognising potential pension scams.

It is important that you seek the correct advice and guidance at this crucial stage in your life from a trusted adviser. You need to feel comfortable and confident that they will be able to give you the peace of mind that what you are doing is most suited and tailored to your needs.

Please click here to get in touch or call 0141 221 2984 if you would like to discuss. 

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