Close
The referendum in the UK on whether to leave the European Union has produced a clear if close result in favor of leaving. Taxand UK considers the immediate impact of the result, the potential impact on the tax system in the UK and internationally, and the likely response from business.
The immediate reaction in the UK and across Europe has been one of shock, as few in business or politics predicted this result. There has been major political upheaval, and financial markets have been volatile, although the London stock market has largely recovered its initial losses.
The British pound has sunk against both the dollar and the euro. The UK’s credit rating has been downgraded by all three credit rating agencies.
The general view is that major business decisions and transactional activity across all markets will remain subdued until the position becomes clearer. The exchange rate move will help UK exporters and make UK assets look cheap to potential investors, although this must be balanced against the fact that the cost base of many UK businesses has increased.
Discover more: Brexit – the tax implications
For similar content to our Global Guide, subscribe to our mailing list and keep up to date.
The general message is that there is no need to rush any decisions, as the timetable for Brexit is likely to be long and drawn out, and tax changes will be limited in the interim. Any acquisitions or new cross-border structures need to have flexibility built in to cope with the range of possible outcomes. Businesses should be mapping their supply chains of goods and services to see how they might be affected by changes to the UK’s tariff and VAT regimes resulting from Brexit.