Brexit negotiations resume

Susie Walker

Susie Walker

Partner and Head of Tax and Brexit Team

22 May 2020

    Whilst COVID-19 has rightly taken over our daily focus, in the background Brexit negotiations have now resumed by video link.

    We are now, of course, almost four months through the transition period which runs from 31 January 2020 to 31 December 2020, unless the latter date is extended. The transition period was put in place to iron out the terms of trade deals with the EU and indications are that an impasse continues. The UK Government is still pushing forward with the 31 December deadline despite EU pressure to extend it in light of the current crisis and a no deal Brexit remains a real risk.

    The House of Commons library published on 20 May 2020 a report on The UK – EU future relationship negotiations: a summary of the positions. As you’ll see, Fishing remains a key area of difference.

    Also, on 20 May 2020, the Cabinet Office published a paper outlining the UK Government's approach to implementing the Protocol on Ireland/Northern Ireland, with its primary focus being on customs, which is likely to prompt a response from the EU that this isn’t doable. The paper proposes that, for Northern Ireland to Great Britain trade, this should operate as now, reflecting the fact that both will be part of the UK customs union.

    For Great Britain to Northern Ireland trade, the need for additional administration is acknowledged (for example, import declarations). The UK will not levy tariffs on goods remaining within the UK and no new physical customs infrastructure will be built. This assumes that the joint UK-EU committee will establish criteria that will allow most Great Britain to Northern Ireland goods to be regarded as not "at risk" of onward movement from Northern Ireland into the EU by crossing the border south.

    Many commentators have assumed that the default position will be that duty will have to be paid and a rebate sought when it has been established that the goods have been consumed in Northern Ireland, which would create administration and a potential cashflow disadvantage. The Government has also stated that it will make full use of its power to waive or reimburse tariffs even where classified as "at risk" of entering the EU market. However, the paper makes no mention of the fact that this power is subject to the EU's state aid rules. The Government expects fewer physical risk assessment checks on goods than would be the case for goods imported from third countries. This could be contentious along with the UK's refusal to allow the EU to have a permanent physical presence in Northern Ireland in order to monitor customs compliance. Given that the Ireland/Northern Ireland issue has been one of the most contentious from the start, it appears no closer to an agreed position with just over six months to go until the end of the transition period.

    In summary, we seem to be where we were and are no closer to reaching agreement on what were always the most difficult areas to negotiate around and reach a position that works for both sides.

    For further information on preparing for Brexit negotiations, visit our Brexit Hub,