As we know, the United Kingdom has notified the EU Commission of its intention to leave the European Union under Article 50 of the Treaty of Lisbon, thereby commencing a two year period of negotiation as to the terms of its departure and discussions as to the possible nature of a future trading partnership.
The UK Government has already started on the practical steps required for life outside the EU by publishing the ‘Great Repeal Bill’ White Paper – in order to bring 44 years’ worth of EU case law and directives onto the UK statute book, in time for Britain's exit from the EU in March 2019. Whatever the outcome of the Brexit discussions we do know already that indirect taxes (namely VAT and customs duty) will be the most significantly impacted, given their fundamental EU origins. So perhaps not unexpectedly the Great Repeal Bill makes comment about how the UK’s indirect tax system will transition into the post-Brexit UK.
In the context of VAT, while the CJEU will no longer have any jurisdiction in existing United Kingdom VAT law (or any new VAT laws), post-Brexit, the Bill will ensure that historic CJEU case law, as it stands on the day of secession from the EU, will have the same binding, or precedent, status as if it were a decision of the Supreme Court in the UK, so as to avoid creating new uncertainties about the application of VAT to UK businesses. CJEU case law has fundamentally shaped the UK’s VAT system, and so it would not make sense for this to be ignored once the UK has formally left the EU.
Customs duty, on the other hand, emanates directly from EU law and there is currently no duty legislation on the UK statute book. The Bill therefore recognises that a future UK customs regime cannot merely incorporate EU law; so unlike many amendments by the Bill, a new customs duty regime will require primary legislation subject to parliamentary scrutiny and a bill to establish the new customs regime framework will be put forward within the next two years. It is likely that the finer details on customs duty will only appear, via secondary legislation, as negotiations on secession progress. However, as ‘trade’ will apparently not be discussed until ‘exit’ terms have been substantively agreed, and as this secondary legislation will probably require the consent of Parliament, it’s difficult to forecast when this is likely to appear.
As my colleague David Wilson points out, however, the implementation of this new customs framework, seems to be not without difficulty.