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27.08.2018

United Kingdom: Government in London publishes first “technical notices” for a “No deal” Brexit scenario

British government increases its preparations for an EU exit without an agreement in place

Key Facts
  • “Technical notices” provide information about the possible consequences of a disorderly Brexit in March 2019 for certain sectors and areas.
  • By the end of September, the British government is looking to develop and issue a total of approximately 80 such guides for various industries and sectors.
  • Such a “no deal” scenario would mean that the UK will leave the EU and would become a non-EU country without a withdrawal agreement and without a framework for a future relationship with the EU.
  • British companies should have the option to set up an independent aid for trade system before the UK leaves the EU.
  • With the establishment of the Trade Remedies Authority (TRA), an aid for trade system should be operational from March onwards.
  • From March 2019 onwards, companies trading with the EU would have to expect to deal with customs declarations, duties and safety certificates.
Author
Kay Masorsky
Partner
Hamburg
> View Profile

On 23/08/2018, the government of the United Kingdom published a total of 25 documents with advice for citizens and businesses in the UK which are aimed at preparing for a “No deal” Brexit scenario.

Publication of “technical notices”

With the publication of these initial “technical notices”, the British government is now ramping up its preparations for an EU exit without an agreement in place. These “technical notices” provide information about possible consequences of a disorderly Brexit in March 2019 for certain sectors and areas and about how the parties affected can prepare properly. By the end of September, the British government is looking to develop and issue a total of approximately 80 such guides for various industries and sectors. The British Prime Minister and the Secretary of State had already announced these publications for August and September on 18/07/2018.

Officially, the UK will leave the EU the night before 30/03/2019. In March, the EU Commission and the UK had agreed on the draft of an exit agreement and a subsequent transitional period up to 31/12/2020, during which the UK is to remain a member of the EU internal market. The finalised exit agreement is expected to be available in October or possibly November 2018. If the negotiations fail and the UK leaves the EU without a deal, there will also be no transitional period.

Such a “no deal” scenario would mean that the UK will leave the EU and would become a non-EU country without a withdrawal agreement and without a framework for a future relationship with the EU at 11:00 p.m. GMT on 29/03/2019.

Details

Four documents were published regarding imports and exports on 23/08/2018 – the first information on protective measures, regarding trade with the EU, classification in the UK trade tariff and the export of controlled goods in the event of a “no deal”.

The purpose of the announcement about the protective measures is to raise awareness among British companies regarding the government’s intention to set up an independent aid for trade system before the UK’s exit from the EU, which is run by the British Trade Remedies Authority (TRA).

Manufacturers from the UK have until March 2019 to submit applications for investigations to the European Commission if they suffer damage due to the actions of an EU manufacturer. With the establishment of the TRA, an aid for trade system should be operational from March onwards. The trade act should establish the TRA as a new non-department-specific public body, while the law on taxation (cross-border trade) is to define the framework for aid for trade measures within the framework of the WTO regulations, which is to be under the responsibility of the TRA.

From March 2019 onwards, companies trading with the EU would have to expect to deal with customs declarations, duties and safety certificates. For the conveyance of goods that are subject to excise duty, the Excise Movement and Control System (EMCS) would no longer be used to control the movement of goods between the EU and the United Kingdom under suspension of excise duty. The EMCS would, however, continue to be used to control the movement of goods subject to excise duty within the United Kingdom, including movements from and to UK seaports, airports and through the Channel Tunnel. Topics such as EORI number, INCOTERMS, import declarations, and pricing would also have to be taken into account.

The government of the United Kingdom has not yet formulated the preparatory measures for trade with Ireland in detail; however, it is recommending that entrepreneurs also obtain information from the Irish government regarding recommended preparatory measures in the case of a trade between the UK (in particular Northern Ireland) and Ireland if necessary.

In addition, a UK trade tariff would be introduced from March 2019 onwards, which is to replace the EUCCT for imports to the UK. HMRC already publishes tariff information online for merchants from the UK trading with non-EU countries. Those who import goods from non-EU countries into the United Kingdom will be familiar with this system.

Export authorisation requirements for various product groups would also change. Exporters of military and dual use goods, civilian firearms and other goods could use the approval provisions in the applicable legal regulations for a “third country” (a non-EU country) as a guideline for the authorisation provisions for exports to EU countries in the event of a “no deal” scenario.

Exporters to EU countries should check whether the exported goods could be controlled and require an export licence.

For further information regarding controls and authorisation, the UK government refers to the Export Control Joint Unit (ECJU). In a “no deal” scenario, the ECJU would publish the new general export authorisation before the UK leaves the EU, as well as further information about how to register to use it. Exporters who require individual authorisation could also apply for this before the exit date. Further information about this would be published in advance of the UK’s departure from the EU. If companies export controlled goods, they should introduce internal processes to ensure compliance with export control regulations.

Prospects

Although Brexit Minister Dominic Raab can see the obligation to prepare for all eventualities, he appears optimistic in Brussels that a good Brexit deal, which is good for both sides, remains by far the most likely result of the negotiations.

The opposition in the United Kingdom is concerned about the announcement of measures for the “no deal” Brexit shortly before the EU summit in October and fears that the government has “hit a brick wall” in the negotiations in Brussels.

Meanwhile, the traditionally pro-Europe Liberal Democrats are seeing increasing opportunities for a second Brexit referendum.

It remains to be seen how the further negotiations will develop, in particular in the lead-up to the EU summit in October 2018.

Article published in Tax Weekly
#31/2018 -United Kingdom: Government in London publishes first “technical notices” for a “No deal” Brexit scenario
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