When is Brexit day now?

Who knows?

I will try to be brief.

In UK law Brexit day is 29 March 2019. It should be easy enough to change that date, but there would have to be the political will. I am not sure that there is definitely a majority for that. If changing the date can be agreed, then we move on to the next steps. This would need to be voted on next week, and preferably on Monday. If the date cannot be changed, then either the UK leaves on 29 March 2019 or, if sufficient support can be found in Parliament, the Article 50 Notice is revoked.

Next week the UK Parliament may vote for the third time on the deal that is on the table. It has been rejected twice already. The Speaker of the House of Commons has ruled it cannot come back again in this Parliament unless amended. It hasn’t been amended. But there is an offer of a longer period to get ready until 22 May 2019. That may be enough.

If the deal on the table comes before Parliament, and is agreed (I would suggest that is still doubtful as at least eighty MPs would need to change their minds) then there is an extended period until 22 May to prepare for the next stage – the implementation period to 31 December 2020. Strictly that would mean no real change for businesses until 31 December 2020. What then happens after 31 December 2020 relies on whether a trade deal can be agreed between the EU and the UK and, I suggest, whether a solution to the Irish border issue can be found. I don’t know if Brexit could be revoked in that period to 22 May 2019. It definitely cannot be revoked after 22 May 2019.

If, however, the deal is not accepted by the UK Parliament, then the time limit is extended to 12 April 2019 (two whole weeks). I am told that the time limit to revoke the Article 50 Notice is also extended to the same date. The idea is to allow more time for other solutions to be found. Your guess is as good as mine as to whether UK politicians will manage this in an extra two weeks. Their track record suggests not. This means that unless the Article 50 Notice is revoked on or by 12 April 2019, a no deal Brexit on 12/13 April 2019 with no transitional period. I do not believe that the UK would be ready, and would certainly not have passed all necessary legislation, let alone got minor things like new Customs facilities in place. I think it will also leave issues at the Irish Border, even if the UK operates an honesty box as it is suggesting, there is nothing to say that the EU27 will reciprocate.

Could things be held up even further? I sense no appetite for that amongst the EU27, but it is possible. For example, if the EU came up with a deal that looked good, but some flesh needs to be put on the bone to gain agreement not only in the UK, but in the EU27, then I suspect a pragmatic approach would be taken. I’m not sure the resignation of the UK Prime Minister would be enough for a further delay. If a general election was called might be enough, but that would almost certainly mean the UK taking part in the European Elections as well. I think a deal being put the UK electorate (another referendum) might also gain an agreement for a further delay, although it is clear that amongst the two main political parties there is no taste for a further referendum. That would almost certainly also require the UK to vote in European elections.

I am not going to try to draw a flowchart.

In the meantime, as I write, the UK Parliament petition for the UK to Revoke Article 50 and remain in the EU stands at nearly 3,250.000 signatures – and the backing continues to grow. The volume of signatures is larger than the populations of member states Lithuania, Slovenia, Latvia, Estonia, Cyprus, Luxembourg and Malta. Within the UK it is more than the population of Northern Ireland and the population of Wales. This is not directly influential upon the UK Government, and the UK’s Prime Minister has already dismissed it saying she won’t change her mind. Actually, it is not her choice whether I comes before Parliament to be debated. It is the choice of a special parliamentary committee. If that committee decides it should be brought before the House, then it can and will be. The question then is whether it will be allowed time to be debated before 29 March 2019 or 12 April 2019. That would largely be in the hands of the Leader of the House of Commons, and she has already made her opposition to it clear.

So what if the Article 50 Notice is revoked, is that it? Do we just go back to what many in the UK felt (rightly or wrongly) was an unacceptable relationship with the EU. Well possibly. But some changes could be made with the agreement of the EU through implementation of the Tusk plan put to the previous UK Prime Minister, Mr Cameron, as well as adopting changes to the UK’s migration law provided for in EU law. Putting the two together now looks rather inviting compared to what is on the table!

Steve Botham

Did you get a fine for sending your VAT return in late?

There is a form for claiming that you had a reasonable excuse.

As a rule excuses such as “the dog ate my homework” do not tend to work. HMRC do sometimes behave strangely and in one notorious case decided that death was not a reasonable excuse – unsurprisingly the taxpayer won at Tribunal.

With Making Tax Digital it will be interesting to see how things pan out. Allegedly there will be a lightish touch – we’ll wait to see on that. HMRC says that just because you cannot make the software work, they expect you to pay the tax on time. At this stage you might ask how you’re supposed to know the answer if the return does not get filed by the computer and the computer does not tell you the answer. Well you have to guess. It is know as estimation.

I would not expect HMRC to attack small underestimates, but if your normal liability is say £5,000 and you pay, say, £500 and it turns out you should have paid £5,000 expect trouble. If you are on cash accounting, there is a fairly simple way of getting a correct answer. Add up your debtors banking for the quarter and, after filtering out anything that is zero-rated or exempt, divide the total by six (unless you’re into the 5% rate). You can then either add up the bills you have paid where you know that you have been charged VAT, or else look at the previous four returns and work out the input tax as a ratio of output tax from that information (that sounds much harder than it actually is).

Strictly you need HMRC’s permission to “estimate”. Call the National Advice Service and ask for permission explaining your difficulty. They should agree. If they do not, make a note, and in any event ask for the call reference number. If HMRC refuse unreasonably, then you can use this as your reasonable excuse on the form! But do not leave your guess until the last minute!

If you are subject to a fine for late payment, think through what had been happening not only at the time, but also in previous tax periods where you have been late, and submit your “reasonable excuse” on the HMRC form.

If you would like some assistance, it is something we have a lot of experience in.


Covertax’s partnership with VAT Forum

Covertax has been a partner in VAT forum for much of the last twenty years. It is through VAT Forum, and also our involvement with the International VAT Association, that we gain not only a knowledge of VAT in other countries, but more importantly an understanding as to how the law works. And we make great contacts with other consultants which we then use for our international client.

The next VAT Forum conference is in the sun. The programme looks pretty interesting, but so does the location!

No Deal Brexit – time limit for EU VAT Refund claims

In the event of No Deal (leaving on 29 March 2019), the time limit for submission of EU VAT refund claims through the portal is 1700 on Friday 29 March 2019. If your claim is late, it may not be met.

After 29 March, claims will revert to the old paper system, known as “13th Directive VAT Refund Claims”. This does rely upon the UK and the EU27 agreeing on reciprocity. I have no indication that this will not be the case. That does mean being able to submit original documents. So those of you who have got into scanning and then shredding your purchase invoices, please retain original invoices for your 13th Directive VAT Refund claims. I am no idea how strict the process will be after Brexit, but it is the norm for “copy” documents to be rejected – that could be a very expensive clear desk policy! It also means sending your claims off to an office for each country. And returns to the days when you need to be sure that your claim reaches the office – lost documents in transit is not excuse. I recall on particularly large claims, I had to take the documents myself and deliver them by hand as we could not get cost effective insured couriers where there was a high value. Instead we relied on our PI policy and an upgraded travel insurance – again costly but amazingly more cost effective than getting an insured courier.

And they said Brexit would get rid of red tape! Clearly not for VAT.

Naturally, we can assist with claims.

No Deal Brexit – Incoterms and Contractual Terms

Urgent. Please check your contractual terms and the incoterms you use. First of all, make sure the incoterms actually reflect your contract. That may seem obvious, but often it is not the case.

Secondly make sure you still want the same Incoterms (or contractual terms) after Brexit. A real example is a company which had DDP (Delivered Duty Paid) terms on an intra EU movement. Apart from the fact that this probably made the supply in the other member state all along (it had been treated as an intra-community movement of goods), it means that following Brexit the UK company will have to have an EU VAT ID (in the particular case, German), pay import VAT and Duty, and then account for the tax in Germany (as a non-established entrepreneur tax on sales may be reverse charged, but this would need to be checked out). This came as a surprise – I bet it did!

We can help with EU VAT registrations and compliance.

Plastic packaging consultation

Following the announcements in Budget 2018, the Treasury has published its plastic packaging consultation. The consultation period closes on 12 May 2019.

It is proposed, subject to consultation, that for produced or imported plastic packaging that doesn’t include at least 30% recycled content, a new tax will be levied on the full weight of the packaging product, at a flat rate set per tonne of packaging material.

This may be straightforward for a single manufacture of a product, and the consultation seeks views on the position where there are multiple manufactures in the production process. For imported goods, the tax would be charged at the point that goods are released into free circulation in the UK. The preferred position is a single threshold at 30% recycled content, though the consultation also looks at an alternative proposal for multiple thresholds with high/medium/low rates.

Brexit – what was it about and are we really addressing the issues with the proposed deals?

With the UK still busy negotiating with itself over Brexit, whilst still pretending to negotiate with the EU, which knows the UK hasn’t finished negotiating with itself, I thought I would go back to basics and ask for some help.
It was said the decision to leave was for a number of reasons and I thought it might be worth revisiting some of these.


The issue related to citizens from other member states coming to the EU (not UK citizens going to other EU member states).
The complaint was that they came to the UK and took “our” jobs whilst at the same time claiming benefits and using our public services.
Much of this could have been resolved by the UK adopting all of the provisions related to free movement, and in theory still could be. We have since come to understand that the UK needs migrant workers, although it seems only those earning more than £30,000 (which rules out useful people like teachers and nurses, as well as fruit and vegetable pickers).
Does Brexit resolve the issue of migration for the UK? Or doe sit mean that UK residents will be asked to perform lower paid tasks and migrant workers better paid tasks? Do we seek an unskilled domestic workforce and to rely on a skilled migrant workforce?

Taking control of our borders

The issue seemed to be linked to migration rather than trade, although I never really got to the bottom of the viable argument. In any event, we now know that migrants from Iran and other countries can land on our shores in rubber dinghies – at least those that do not drown in the trying.
Of course, the UK sits outside of the Shengen area, and does therefore control its borders for human beings (excepting those in rubber dinghies). But technically, the UK must let in citizens from other EU member states with some exceptions (it was viable to refuse entry to bad people, if we knew that they were bad). I do not believe that a trade-based isolationist argument was ever put forward in this respect but will move on to “free trade” later.
Now this desire has created a huge problem in respect of Ireland, which I, amongst a few others, pointed out prior to the referendum, and UK ministers seemed only to catch up with at the end of 2017.
And UK ministers found out quite late on the Dover was a very busy port upon which many aspects of the UK economy and way of life is dependent upon. The suggestion with Dover is that it effectively becomes and open port, with no checks, which rather defeats the object of taking control of our borders.
Does Brexit, therefore, help the UK to take control of its borders and in what way is that good for the UK? Is risking a return to the troubles in Ireland (and most probably the mainland) worth it? Is a smugglers’ charter worth it – will there be another Dutch Elm Disease as a result, for example?

Freedom to make our own trade deals

Maybe I show as much selective memory as the UK ‘s Brexit leaders, but I really do not recall arguments as to the UK’s ability to make trade deals on its own being a key part of the arguments put to the UK public. I do not recall it on the side of a big red bus, nor on posters, nor on TV adverts. But it has since become the “will of the people” according to the UK Brexit leaders. UK politicians, and Mrs May in particular, frequently claim to know the will of the British people, and even why 17.4 million people voted the way that they did, are rarely challenged and so I guess they must be right.
However, I do not understand how the UK negotiating on its own could get better trade deals, or trade deals any quicker, than negotiating within the EU bloc. I don’t understand how being a member of the EU has stopped the UK, or harmed the UK, in its trade with countries outside the EU. And I don’t understand how the UK can replicate the trade agreements it already benefits from as part of the EU bloc without an hiatus period – and it would seem that the UK government now admits that it cannot do so.
So, help me, but just how will the UK being able to negotiate its own trade deals help us? An example would be good.


I guess that one issue with the taking control of our decision making process, or sovereignty, is what is actually meant by this. According to the UK Parliament’s website sovereignty in the UK rests with parliament. To quote: –
“Parliamentary sovereignty is a principle of the UK constitution. It makes Parliament the supreme legal authority in the UK, which can create or end any law. Generally, the courts cannot overrule its legislation and no Parliament can pass laws that future Parliaments cannot change. Parliamentary sovereignty is the most important part of the UK constitution.”
But this is not how the UK Government has interpreted sovereignty during the Brexit process as time and again it has sought to exclude Parliament from decision making, even being brought to book by the courts.
Now given the whole mess within the UK Parliament and UK Government, and the involvement of the UK courts, in the UK decisions making process as regards Brexit, you would be forgiven for thinking that Parliament has got this wrong on their website. But it has not.
So one big question is why the UK Government says the law cannot be changed in respect of the UK defaulting to “no deal” on 29 March 2019? The truth of the matter is that this could only happen if there is insufficient Parliamentary time permitted to debate and pass a new law overturning the original one. Put more simply, the leaving date can be changed or removed completely. For this not to happen would solely be by the Government frustrating the will of parliament, and indeed, failing in the aim to return more sovereignty to Parliament.
The argument made, and still made, is that the EU unelected civil servants impose laws on the UK. We keep getting the argument about straight bananas, which bears no truth and appears to have been started by a journalist from the Daily Telegraph newspaper many years ago, the same journalist fabricating stories as wide ranging as standard sized condoms and the banning of prawn cocktail crisps (I wish that one were true!).
I understand the decision making process in the EU – as I am sure all users of this forum do as well. Given in particular the weight of the UK’s “vote” on European matters, the democratic decisions taken by the member states, as managed by the EU’s civil servants, have bar a few met with the agreement or even the leadership of the UK.
I then look at the deals being considered by UK Parliamentarians, and it seems to me that they give away far more sovereignty than we would in any way regain.
So, please help me, in what way will “returning” sovereignty to a shambles of a Parliament improve things for the vast majority of UK citizens? And just which nugget of valuable sovereignty will the UK get back? I still don’t know thirty one months later.

The European Court of Justice (“CJEU”)

The argument is that these unelected judges somewhere in Europe are faceless bureaucrats doing the bidding of the faceless bureaucrats in Brussels. The debate both prior to the referendum and since has also confused the CJEU with the European Court of Human Rights, which has nothing to do with the EU, and I feel sure that many of those Brexit leaders continuing to confuse the argument know better.
On “faceless”, of course, a few clicks on a mouse and you can find out about the judges and even see a picture of them. You can also find out how they get their jobs.
On the role of the judiciary, even within the UK’s own unwritten constitution, they have a very important position – and unfortunately over the last few years that has been forgotten by both our press and our politicians. So it is with the CJEU. As a VAT consultant I know too well the role of the CJEU and applaud it. UK taxpayers have benefitted from decisions of that body – to be clear taxpayers have been protected from the excesses of our Government. The UK Government has also benefitted from decisions of that Court, not least (in my field) in terms of attacking tax avoidance.
I am also aware that when it comes to matters of international trade there has to be an arbiter. There is for example an EFTA court and there is a WTO court. So I wonder whether the argument is that the UK does not want any court other than its own ruling on anything to do with the UK. It is not clear and neither is any argument as to what should happen instead clear especially if the UK chooses to rejoin EFTA or follow “WTO rules”.
I am left to ask, then, about how the UK ridding itself of the CJEU will improve the lives and businesses of the people of the UK? It has certainly become no clearer to me over the past two and a half years.

Getting rid of red tape

Simply addressed, it was a concept rather than specifics, but the specifics of leaving the EU specifically increases red tape specifically for UK businesses and specifically for UK citizens. Brexit does not do what they said on the tin!
A proportion of the UK Population is Xenophobic
Or else believes what they are told by xenophobes. The UK is not alone even in the EU with this development as evidenced by the progression of nationalist politics in many countries.
One big lesson is that we in the UK need to do more to educate our children properly and, in particular, should teach twentieth century history far better. I think it is too late for those over eighteen.
I’m afraid that “two world wars and one world cup” is no basis upon which to make such a major national decision, but there is no doubt that a proportion of the electorate in the UK was encouraged to vote is such a nationalistic way.
Whilst that does not provide a solution to the position the UK is in with Brexit, it does explain why the Prime Minister has so much difficulty in coming to a deal which satisfies such irrational needs from amongst her own supporter and further afield. Is there a quick fix? I don’t think so as, within the UK, one thing the referendum did was to let this particular genie out of the bottle and I think it will take many years to put it back in.


Hindsight is a wonderful thing. They say, however, that you need to look back to see how far you have come. With Brexit, I think we need to look forward to see how far we have come, because in the UK we seem to have gone backwards.
Nevertheless, this is a good time, and probably the last available time, to look at why we said we are leaving the EU and to look at whether we have achieved what we wanted, and whether there was a real issue there in the first place. It could be that the decision to leave was no more than throwing the baby out with the bathwater – for example, adopting the laws we could have in respect of EU migration would probably satisfy all but the most bigoted supporter of Brexit on migration.
It could even be that a “staying in” deal needs to be put on the table. Take what seemed at the time the meagre offerings of Mr Tusk to Mr Cameron in February 2016 and add what we have now learned to put some more substantial meat on the bones. We forget the Tusk offer so easily, but it incorporated restrictions on migration including excluding migrants from UK benefits for up to four years, an emergency brake on EU migration to the UK (well we’ve effectively had that already and lost, for example, an awful lot of nurses), legal safeguards for the pound sterling and our businesses and citizens, no more leakage of sovereignty to the EU, allowing national Parliaments by simple majority to block legislative proposals from the Commission, and getting rid of red tape.
To be frank, where we have got to with negotiations for exiting the EU, makes Tusk’s offer sound brilliant. But now, given that both the UK and the EU27 have learned more about ourselves, surely it provides a basis for real reform within the EU and, indeed, a basis for the UK to stay in. Sadly, this option has not been put on the table by the UK Government and perhaps it is time for the EU27 to dust it off as a way forward.
But looking at the arguments put forward originally, it does seem to me that the “deal” and proposed deals all involve at least a loss of say in the decisions that control the UK. I find that totally perverse given where we started with this argument.

Steve Botham