www.pwc.co.uk Indirect tax forum 5
Agenda 13.30 Registration 14.00 Welcome and update on hot topics Martin Blanche, 14.20 Workshop session 1 15.00 Tea break 15.20 Workshop session 2 16.00 Guest speaker plenary and Q&A 16:50 Concluding remarks 17:00 Drinks reception Slide 2
Today s workshops Workshops 1. Indirect tax and data management The art of the possible 2. Using forensic technology tools to resolve tax investigations 3. The VAT treatment of pension costs Only 6 months to go 4. VAT Case Law Update Implications and issues on the horizon Room Trafalgar 2 Trafalgar 1 St James 1 Burton Slide 3
Update 1 2 3 4 5 EU Referendum Airtours PPG Holdings Ltd Larentia + Minerva New union customs code Slide 4
EU Referendum Now what? 1. Potential timeline of an EU exit 2. Brexit scenarios 3. UK VAT law v EU Directives 4. Key issues for your business 5. Questions??? Slide 5
Pension fund management costs following the PPG Holdings ECJ Draft revenue and customs brief confirmed The post-ppg transitional period will be extended by a year to 31 December 2016, and sets out HMRC s current thoughts on tripartite agreements, trustees supplying services to employers, corporation tax deductions and VAT grouping. Slide 6
Taxpayer with no contractual right to receive services could not recover VAT: Airtours Holidays Transport Ltd [2016] UKSC 21 A taxpayer with a contractual obligation to pay for a supply but no contractual right to receive it does not have a right to recover the VAT paid to the supplier. The Supreme Court confirms the boundaries between what constitutes third party consideration and the contractual right to have services supplied to another party. The case will be of interest to a wide range of businesses involved in transactions as well as those using tripartite contracts. 1 2 3 Slide 7
ECJ supports VAT deduction by active holding companies and VAT grouping for natural persons: Larentia + Minerva (C-108/14) Active holding companies entitled to full VAT deduction on costs. Cases reaching settlement and VAT refunds possible. Finland and Denmark tax authorities announce a change in Policy. Other EU territories may follow HMRC issued draft guidance and entered a consultation process. 1 2 3 4 Slide 8
New union customs code: The shifting tax environment (Customs/Excise) Shift from paper to electronic Shift from standard penalties to risk or behavioural based In the UK, this is reflected by: - Increased pressure from HMRC for businesses to improve their compliance framework SAO, AEO and Penalty regimes - Reaction of businesses TRA work Global Trade Compliance Programs New Union Customs Code 1 May 2016 Slide 9
Navigating uncertainty after the Leave vote Indirect tax implications of a leave vote Brexit what next?
Agenda 1. Summary 2. Process and potential timeline of exiting the EU 3. Brexit scenarios 4. Key issues for business 5. Questions 2
Key questions for your consideration 1 2 3 4 What issues should you prioritise in the immediate term (first week, first month, first three months)? What are the key levers you can call upon to maximise opportunities during an uncertain period? How can you ensure you successfully navigate this period of uncertainty and implement plans in the longer term? What are the key messages you should be communicating to your stakeholders? 12
1 Process and potential timeline of exiting the EU Process and potential timeline of exiting the EU June 2016 13
Brexit is a process not an act, with a long period of negotiation Political events in the EU Brexit related events 2 nd Feb 2016 Donald Tusk released outline EU UK reform deal Jan 2016 19 th Feb 2016 David Cameron agreed deal with EU leaders that sees UK attain "special status" within the EU Netherlands takes on presidency of EU council 23 rd June 2016 Referendum on the fate of the UK s membership of the European Union. The UK public votes to leave the EU. Q3 2016 PM steps down in September and new Conservative leader is elected Q2 2017 Q1/2017 UK Government notifies the European Council of its intention to leave the EU? France presidential election Q2/3 2017 Negotiations begin between the European Council and the UK on Brexit. Potential for formal discussions with individual members states to strike bilateral deals? Q4 2017 Germany parliamentary election Q2 2018 Italy General election 2019 and Beyond It is likely that the negotiations on the UK s future relations with the EU will continue for more than two years. The timings of this are uncertain but could last from 5-10 years. The UK would also have to pursue a number of free trade agreements with its key trading partners which will take time. 2016 2017 2018 2019 2020 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec May 2016 London mayoral election Slovakia takes on presidency of EU council Jan 2017 Malta takes on presidency EU council Jan 2018 Estonia takes presidency of EU council July 2018 Q4 2018 Bulgaria takes on presidency of EU council Brexit? Jan 2019 Austria takes on presidency of EU council May 2019 European elections July 2019 Romania takes on presidency of EU council Q4 2019 Spain General Election Q2 2020 UK General Election Key unknowns: EU response to UK demands post Brexit, Geopolitical events, economic events 14
2 Brexit scenarios Brexit scenarios June 2016 15
Potential implications Situation 2 Brexit scenarios We have identified four main scenarios that could manifest in the upcoming UK/EU negotiations We have identified four scenarios that could occur and that capture the different degrees of integration that the UK may have with the EU in the future. The scenarios could take different specific forms, but those considered in most of the existing evidence have broadly coalesced around one of the following scenarios. Potential EU/UK agreements EEA member (Norwegian option) Free trade agreement (FTA) Bilateral agreement No access agreement (WTO/MFN) The UK remains part of the EEA and keeps the four freedoms of labour, capital, goods and services. FS passporting applies UK negotiates a Free Trade Agreement (FTA) with the EU The UK enters into a bilateral integration treaty with the EU The UK does not establish any new trade agreements with the EU UK will need to make a substantial contribution to the EU budget and comply with EU social, employment and product regulation Tariff-free trade between the UK and the EU in goods (but not services). UK would have access to some areas of the Single Market, at the cost of adopting the relevant EU regulations Only WTO terms are still applied UK goods and services would be treated in the same way as US ones in the EU 16
Blueprint for action Business impacts Scenarios and channels Importance of EU to business 3 Key issues for business Our Brexit Decision Framework translates the risks arising from a UK exit from the EU into tangible business actions How important is the EU to your organisation? In terms of: Strategically: does your organisation use the UK as a gateway to the broader region? Revenue: where are your organisation s largest consumer markets in Europe? Operationally: what is the manufacturing / supply chain footprint in Europe? Identify the importance of the EU to the business. Four options: UK business with international exposure European business based in the UK Third country business based in the UK Third country business based in Europe Through which channels would Brexit feed through into? What Brexit scenario resonates with you? How would each impact channel evolve within this scenario? Identify which Exit scenario to apply: FTA, EEA (Norway), Bilateral (Switzerland) or WTO Trade & supply chains Regulation FDI Labour Tax and market fiscal impacts Un-certainty Sectorspecific How would these impact your organisation s business model and value chain? What is the potential impact on each aspect of your organisation s organisation? What are the risks? And are there any opportunities? Revenue model (market access, marketing, pricing) Supply chain (logistics, manufacturing, procurement) Finance / Treasury (corporate structure, financing, exchange rate risks, investor relations) Talent model (HR, Mobility, Reward) Legal and regulatory (compliance, product specifications, health & safety) Technology (IT systems, Digital and Information systems, Data Protection, out-sourcing contracts) Tax (Direct taxes, Indirect taxes, Withholding taxes, Tax structure and strategy) How can your organisation proactively respond to these anticipated impacts? What strategic choices are available? Which one should I pick? How do I execute this within my organisation? 17
QUESTIONS? Slide 18
Final points 1 Feedback forms 2 Next event 3 Drinks reception! Slide 19
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