In a recent interview, British Chancellor Phillip Hammond admitted that if Brexit negotiations force the UK to leave the EU’s single market, the country may turn itself into the tax haven of Europe.
Hard Brexit
Prime Minister Theresa May previously announced that the UK will begin the Brexit process in early 2017. May implied that her government will pursue a ‘hard’ Brexit strategy in negotiations, prioritising national sovereignty over freedom of movement. This could deprive UK firms of access to the EU’s lucrative single market, which Hammond recently admitted would be “economically damaging.”
In a recent speech, May re-confirmed her commitment to hard Brexit. A few days beforehand, Hammond gave an interview to German newspaper Welt am Sonntag, stating that should the UK be shut out from the EU’s single market, the government will do “whatever we have to” to keep the nation’s economy stable. This includes measures such as turning the UK into Europe’s tax haven.
Economic boost
Outlining his plans to boost the UK’s economy, post-hard Brexit, Hammond said that the country might have to move away from its existing European-style tax system. He suggested that the UK may slash its corporation tax rate even lower than it is already planning to, to “regain competitiveness” on the global stage. He was then asked whether the country’s future tax model resembles that of a tax haven.
Responding, Hammond noted: “I personally hope we will be able to remain in the mainstream of European economic and social thinking. But if we are forced to be something different, then we will have to become something different… If we have no access to the European market, if we are closed off, if Britain were to leave the European Union without an agreement on market access, then we could suffer from economic damage at least in the short-term.”
Last resort
Going on, the Chancellor said: “In this case, we could be forced to change our economic model and we will have to change our model to regain competitiveness… And you can be sure we will do whatever we have to do. The British people are not going to lie down and say, too bad, we’ve been wounded. We will change our model, and we will come back, and we will be competitively engaged.”
Hammond did admit that he hopes the UK can strike “new arrangement” with the EU, where it can trade with European countries on favourable terms, without accepting freedom of movement. But he also re-confirmed Whitehall’s commitment to hard Brexit. Elaborating, he said: “We are aware that the message from the referendum is that we must control our immigration policy… At the moment, we don’t have any control… That has to stop. That’s the message the British people sent on June 23rd [2016].”
Brexit benefits
Whitehall is potentially set to radically reform the country’s tax system, which could benefit you as a small business owner, by slashing your outgoings. At the very least, the corporation tax rate will be decreased going forward, whatever happens with Brexit, making it very advantageous for you to establish a limited company in the UK. As a company registration agent, Turner Little can provide you with the company formation services needed to take advantage of the UK’s beneficial tax landscape.
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