The UK Referendum on EU Membership
On Thursday 23 June 2016 a majority of voters in the UK (slightly under 52%) voted for the so- called Brexit ; departure from the European Union.
Since that time many column inches have been filling the newspapers, informed reports and blogs from specialists about the rapid approach of Armageddon and the disappearance of the United Kingdom from the political and economic world as we know it. Or otherwise.
Guernsey’s status has been raised in worried or curiosity calls to our offices and questions asked as to the impact of the Brexit on the registry of yachts.
To understand what lies ahead, one must first understand the Crown Dependencies relationship with the EU which was enshrined in Protocol number 3 of the Treaty of Accession signed in 1972. The islands were included in the negotiations, but were somewhat poetically, and actually, referred to as “in, but effectively out” as a result of the Protocol.
All this will be the subject of negotiation. Britain has to implement Article 50. No-one can do this for them. The process is already expected take at least the two years set down for removal from the EU.
We have seen that the markets have strained under the uncertainty. They fell then recovered to a satisfactory level. The pound has fallen and made some recovery. The price of sterling means export possibilities are improved. Estate agents report a growth in interest for UK properties.
Yachting. A weaker pound means better prospects for boat builders, equipment manufacturers and refit and repair yards.
British Registry. Many Red Ensign members are not in the EU. Membership or otherwise has had no significant impact on vessel registration.
VAT. Guernsey is not in the EU for VAT. Maybe UK VAT will be recognised in the EU as a result of the yet to be held negotiations, but, if not, UK VAT paid before the UK departs will have to be recognised as having validity and grandfathering will have to be in place in the same way as it was for members joining the EU.
If the UK is not part of the EU VAT group, there are other remaining member states with whom we can, or have to, already work and there will be little or no change in that respect.
As for direct taxes, Guernsey’s regime is unlikely to change significantly if at all, and the UK will continue to handle it’s own affairs independently. Some experts have already noted opportunities for High Net Worth non-UK domiciles. This is not our speciality.
There are very likely to be some advantages as yet to appear or be disclosed. It is just too soon to call.