Just recently, the UK government published the anticipated Brexit White Paper. The 104 page document, split into four chapters sets out the relationship that the UK intends to have with the European Union, post Brexit.
Despite the positive general feeling on the government’s intentions to protect jobs and investment now and in the future, to seek a free trade area for goods and ensure a common rule book to enable frictionless trade between the UK and EU, the paper failed to clarify the future of VAT paid status on boats and goods after the UK leaves the EU.
This, in addition to the highly publicised debates in Parliament last week on the Government’s Taxation (Cross-border Trade) Bill has led to British Marine concerns.
In a recent British Marine blog post, they stated that “four key amendments to the Government’s Taxation) Bill were tabled by the Eurosceptic European Research Group of Conservative MPs in opposition to elements of the customs proposal contained in the White Paper”.
They go on to say that “amendment number 73 is of particular interest/concern” as it prohibits the UK from staying in the EU’s VAT area, creating a VAT border between the UK and EU after Brexit. As a result of this, and without a favourable negotiated agreement between the UK and the EU, boats and goods in the UK which have already been placed on the market in the EU could be subject to VAT if sold across the new UK/EU border.
The British Marine go on to explain how the vote on the amendment narrowly passed by 303 votes to 300, with 11 Conservative MPs joining opposition MPs in voting against. The Bill will now go to the House of Lords in the autumn, where Peers may vote to remove the amendment, meaning that another vote on it would take place by MPs before the Bill can receive Royal Assent.
The alternative to this Parliamentary process is the Government’s customs policy evolving in the autumn to propose an even closer customs and VAT relationship with the EU than that contained in the White Paper. In this case, the Government would look to remove the amendment from the Bill to allow it to pursue its alternative policy.
It is believed that the government are aware of the marine industry’s VAT concerns (concerns that are no doubt shared across many sectors) and is a “priority for them to develop a proposal that safeguards these industries” however, clear plans on how this will be achieved is not yet on the horizon.