Jeremy Woolf and Barbara Belgrano look at how Brexit affects the UK tax position and consider some of the issues which will be ongoing, at least in the near future.

(3:08) Where we are today: you have to consider which period your case falls within. There are three periods to consider: (1) 2018 up to IP Completion Day being 31st December 2020 (2) 1 January 2021 - 31st December 2023 (3) 1st January 2024 onwards.

The first period: up to IP Completion Day on 31st December 2020

• (4:42) The UK still a member of the EU but subject to the 2018 Act which purport to have retroactive effect. Article 89 of the Withdrawal Agreement (endorsed by HMRC v Perfect) make ECJ decisions relating to litigation commenced before Brexit or during the first period binding. ECJ decisions post Brexit only persuasive. See Lipton and The Umbrella Interchange.
• (7:04) Effect of section 2 2018 Act - saves EU-derived domestic law before IP Completion Day subject to Section 5 (supremacy) and Schedule 1 (Francovich damages).
• (8:56) Schedules 1 and 8 2018 Act - transitional provisions. To what extent, post Brexit, can you rely on general principles of EU law?  Allianz Global v Barclays.
• (12:01) Section 3 of the 2018 Act (incorporation of direct EU legislation) which is subject to Section 5 and Schedule 1.
• (13:06) Section 4 of the 2018 Act (the saving of rights under section 2 ECA). Wide rule important in direct tax field (eg transfer of assets code). Effect in tax law of The Freedom of Establishment and Free Movement of Services EU Exit Regulations 2019. Effect of EU Directives and CG Fry & Son Ltd. Purposive interpretation dealt with in section 6. Harris v Environment Agency.

The second period: 1st January 2021 - 31st December 2023

• (19:49) Section 6 of the 2018 Act (extent to which UK courts bound by ECJ judgments).  HMRC v Perfect, Lipton and The Umbrella Interchange cases.

The third period: post 1st January 2024

• (22:18) RULA now takes effect. It is not retrospective and only covers disputes that relate to the period post January 2024.
• (23:53) Section 2 of RULA repeals section 4 of the 2018 Act. Section 3 of RULA abolishes the supremacy of EU law. Will therefore be very difficult to rely on EU law in the direct tax arena (even in Transfer of Assets Code) post 1st January 2024.
• (25:54) VAT and excise duties in a different position due to section 28 Finance Act.
• (27:10) Section 6 of RULA is not yet in force. Amended test as regards looking at earlier cases. VAT most likely to be affected.

EU law remains very relevant up to 1st January 2024, despite Brexit. And EU law remains relevant going forward in the VAT context. After 1st January 2024 EU law may still have an impact on the construction of UK law.

Citations

Legislation

• Retained EU Law Revocation & Reform Act 2023 ("RULA")
• European Union (Withdrawal) Act 2018 (the "2018 Act")
• Article 89 Withdrawal Agreement
• The European Communities Act 1972
• The Freedom of Establishment and Free Movement of Services EU Exit Regulations 2019
• Section 28 Finance Act 2024

Transfer of Assets Code

Cases

• HMRC v Perfect [2022] EWCA Civ 330
• Lipton v BA Cityflyer Ltd [2024] UKSC 24, 3 WLR 474
• The Umbrella Interchange Fee Claimants v The Umbrella Interchange Fee Defendants[2024] EWCA Civ 1559 and [2023] CAT 49.
• Franciovich and Bonifaci v Italy
• Allianz Global Investors & Or v Barclays Bank & Ors [2022] EWCA Civ 353
• CG Fry & Son Ltd [EWCA] Civ 730 on appeal to the Supreme Court
• Omagh Leasing
• Harris v Environment Agency [2022] EWHC 2264 (Admin)