The House of Commons Library has published a helpful research briefing setting out the tax implications of the UK leaving the EU. The briefing discusses the balance of competences between the UK and the EU with regard to tax law, before looking at the comment, to date, on this aspect of Brexit.

Implications are likely to be less significant than in some policy areas, due to most aspects of tax being part of individual Member State competence, with the major exceptions of VAT and excise duties. The harmonisation of indirect taxes across Member States has been an essential element to the achievement of an effective Single Market. This has consequently limited the UK’s discretion in setting the rates of VAT on individual goods and services. In addition, many commentators have raised concerns about the UK’s ability in the future to maintain its existing range of VAT reliefs.

However, the relative importance of VAT to the Exchequer – accounting for around 17% of all government receipts – suggests that future governments would be unlikely to substantially increase these reliefs or abolish the tax, even while exit from the EU would give them this power.

For more information on this topic, you can click here to download a presentation given last year by CTG’s Technical Adviser, Graham Elliott.