Brexit, what happens if Parliament passes the new deal?
It was hard to miss the news last month of a new deal agreed between the UK and EU. This article explores the legal ramifications of adopting this deal as law. Before delving into the conundrum itself, it is probably best to give a background on the terminology frequently used when discussing Brexit. Specifically, there are three legal documents whose legal status will have an enormous impact on post-Brexit UK Law. The first is the European Union (Withdrawal) Act 2018 (EUWA). This Act of Parliament received royal assent in June 2018 and is currently the governing law on the UK's position post-Brexit. Second, is the new Withdrawal Agreement (New WA). This is the agreement reached on 17th October 2019 by Prime Minister Johnson and the EU. Finally, there is the European Union (Withdrawal Agreement) Bill, more commonly referred to as The Withdrawal Agreement Bill (WAB). This Bill was first presented to Parliament on 19th October 2019 (Super Saturday). The New WA itself does not become binding until it is ratified. Pursuant to the EUWA, the UK cant do this without the House of Commons passing a motion known as a meaningful vote. The EU process of ratification is discussed in our article The Withdrawal Agreement Is It Legal?. Importantly, the New WA is not legally binding under domestic law and must, therefore, be given effect through an Act of Parliament, hence the introduction of the WAB into the House of Commons. On Super Saturday, MPs opted to withhold approval of the New WA through a meaningful vote until the means for transposing it into domestic law had been agreed. What this means practically is the New WA cannot become binding unless the WAB is first passed. If passed, the WAB will also amend the EUWA. The passing of the WAB would amend existing provisions in the EUWA and introduce a buffer period known interchangeably as the transition period or implementation period. This is the period between exit day and 31st December 2020. The latter date is frequently referred to as IP completion day. It is envisioned that during this period, a more permanent agreement with the EU will be reached and passed. This transition period may be extended once for up to 1 or 2 years but only if it is agreed by 1st July 2020. Unlike the current situation, once the UK has left the EU, the ability to bilaterally agree on an extension beyond and/or after this deadline will not be an option.
The Transition Period
Under the EUWA, EU law after exit day only has effect in so far as it has been transposed into UK Law. In contrast, the WAB introduces two provisions which effectively delay this. Under these two sections, both EU Law which applies directly or has direct effect, as well as EU, derived law continue to apply as if the UK was still a member of the EU. Similarly, rules regarding the relationship with the CJEU are postponed to the end of the transition period. It, therefore, appears that the elements of EU law excluded by EUWA will continue to have effect in the UK until at least 31st December 2020. The introduction of a transition period has broadened more than just the types of laws which will apply in the short-term. It has also expanded the potential scope of the laws to be retained. This is because any new law (for example a European Commission Decision) made after exit day will still apply to the UK, as long as it is made or passed before the IP completion day.
The Law After the Transition Period
Save for changing the date to which the rules applies to, the original provisions in the EUWA remain largely unchanged. This said a new section has been introduced which appears to reduce the scope of the exceptions to the retained law by recognising rights and remedies created or arising under the New WA. The explanatory notes published with the WAB provides an insight into what specific rights and remedies are likely to be covered by this, namely:
The ability to rely directly on the New WA to bring claims before UK courts;
The supremacy of the New WA over any inconsistent domestic laws;
The use of the EU method of interpretation and principles when examining references contained in New WA to EU law and its concepts.
The introduction of another new provision confirms that the when determining the validity, meaning or effect of the New WA, and by default, the rights and remedies created therein, EU rules of interpretation and EU general principles apply. This niche group of laws, therefore, grant those relying on or interpreting it much broader scope than the general retained laws. In contrast, all other retained laws will be subject to the much stricter UK rules of interpretation. In practical terms what this means for litigation is, if a party wishes to challenge the application of domestic law and can establish a relevant right which has been breached, the scope for arguing that the domestic law has been misapplied will be significantly wider. It also offers the opportunity to have the relevant law declared inconsistent, thereby preventing its application to the matter at hand.
As is evident from the variety of possible avenues the UK may still follow, much is still yet to be decided and agreed. With the pending election in December, it is also largely impossible to predict which route we shall be driven towards. The New WA does not, therefore, bring the clarity and conclusion some may hope it would achieve.
An Assessment to Tax is never ‘stale’, but it might be out of date: HMRC v Tooth
This article briefly discusses the key points arising out of the decision of the UK Supreme Court in HMRC v Tooth  UKSC 17. The case considered (1) whether a discovery assessment could become “stale” and (2) the meaning of the phrase “deliberate inaccuracy”.
VATA 1994 s.47, Agency, Onward Supply Relief, & Double Taxation
On 12 July 2021, the First-tier Tribunal (Tax Chamber) (“FTT”) released its decision in Scanwell Logistics (UK) Limited v HMRC  UKFTT 261 (TC), rejecting the taxpayer’s claim for onward supply relief (“OSR”).
Whilst OSR is now limited, post-Brexit, to goods imported into Northern Ireland for onward supply to the EU, the FTT’s discussion of agency under section 47 of the Value Added Tax Act 1994 (“VATA”) is of broader interest.
The case serves as a reminder of the significant financial consequences that can result from errors in tax planning, as Scanwell was ultimately held liable for £5.7 million in unpaid import VAT despite the fact that the imported goods almost immediately left the UK (which, if properly planned, could have meant Scanwell was relieved from liability to import VAT).
Draft Finance Bill 2022—tax avoidance measures
Helen McGhee, senior associate at Joseph Hage Aaronson LLP, considers the draft Finance Bill 2022 clauses published on 20 July 2021 in relation to tax avoidance and recent updates to the tax avoidance regime.
Getting Closer: A Global Minimum Tax on Corporations
On 1 July 2021, US Treasury Secretary Janet Yellen announced that countries representing over 90% of global GDP had agreed to a global minimum tax on corporations (“GMCT”). The GMCT seeks to put a floor on tax competition on corporate income through the introduction of a minimum corporate tax of at least 15%. Whilst certain elements give rise to positive expectations, some caveats should be noted. Much will depend on (1) the outcome of future political negotiations and (2) the detail of the drafting at international and national levels.
The DBKAG & K (CJEU) decision: an opportunity for investment funds?
On 17 June 2021, the European Court decided the joint cases K (C-58/20) and DBKAG (C-59/20) regarding whether the supply of certain services constituted the “management of special investment funds”, benefiting from the VAT exemption enshrined in Article 135(1)(g) of Council Directive 2006/112/EC.