Are you prepared for a No Deal? Well, you’d better be, says Nick Parkinson, solicitor at Travlaw LLP, as he tries to make sense of it all…
We are leaving on 31/10/19. Come what ‘May’. Do or die!
Brexit has ground to a halt. The political wrangling over whether to have a soft, hard or liquid Brexit has been subsumed by the ongoing Tory Leadership Contest in which Boris Johnson is widely tipped to be our next Prime Minister. With Boris’ recent pledge to leave the EU ‘with or without a deal’, and that coming from an ardent Leave Campaigner, is it time for travel companies to brace themselves for the stark reality of the UK leaving the EU on 31/10/19 without a deal? Or is it just a case of ‘fake deadlines’ and ‘fake promises’? Either way, it seems like an opportune time to remind ourselves of some of the implications that a No Deal Brexit could have on the travel industry.
Flights
No significant disruption is expected in the immediate aftermath of leaving the EU without a deal. The UK and EU have in place an agreement for ‘basic connectivity’ for flights between the UK and EU countries for 12 months. There are some limitations and, of course, a long term agreement will need to be negotiated.
Providing services in EU Countries
Are you offering travel services to customers in other EU countries? Good news. Under WTO Rules there should be limited impact on your ability to do so.
Establishing a permanent business presence in another EU country
Again, under WTO Rules this should be straight forward in principle, but there are specific restrictions in place for Belgium, Portugal and Italy to be aware of.
Free movement of workers
Uncertainty awaits. EU countries will have a free hand to say who can and cannot come over, on what terms and for how long.
Currency exchange rates
The 2016 Referendum caused a reaction to currency markets with the pound falling sharply against the Euro and the US dollar. That may explain why concerns over exchange rates ranked top of the list in response to an August 2018 survey of members of the Association of Bonded Travel Organisers Trust (ABTOT). The concerns are not without merit, with a recent report suggesting that the pound could fall in parity with the Euro if Boris follows through with his ‘Brexit threat’ to leave the EU without a deal.
VAT – Tour Operators Margins Scheme
Will it be necessary for travel companies to register for VAT purposes in each Member State in which they are suppling services? Quite possibly, hence ABTA has advised its members to seek independent tax advice to consider the potential liabilities, process and timescales involved.
But that’s only scratching the surface
The implications of a No Deal Brexit on the travel industry are far reaching and go way beyond the issues that we are only able to touch upon briefly. Only time will tell.
