This article by Callum Wilson originally appeared in the Press & Journal.

If the UK and EU conclude a Brexit withdrawal agreement, there will be a transition period.

The UK will during this time continue to participate in the EU customs union and single market, while negotiations on an agreement governing future relations take place.

There is no requirement for Britain to retain VAT after the transition period but the UK Government intends to keep it broadly in its current form.

Change should be relatively gradual, although some new procedures will be required.

Existing EU trade arrangements will also remain broadly unchanged through the transition period.

If there is no deal, there will be more immediate and substantial changes.

Under this scenario, the UK would no longer be part of the EU’s single market and customs union, and the freedom of movement of people, goods, services and capital would no longer apply. The government has published a “Partnership Pack: Preparing for a ‘No Deal’ EU Exit” to support traders and intermediaries engaged in international trade, providing useful guidance on VAT, and customs processes and procedures likely to apply after a no-deal Brexit.

Currently, the EU has trade agreements with more than 70 non-EU countries. Post-Brexit, the UK will cease to be a party to those agreements and, unless the treaty terms are “rolled over”, new agreements will need to be reached. Progress in this area is moving more slowly than hoped – for example, with Japan.

Recipients and payers of interest, royalties and dividends which rely on EU directive provisions to receive or make payments without deduction of withholding taxes should review their existing structures and consider whether equivalent treatment is available under the relevant double tax treaty. It won’t always be.

EU social security rules provide protection for individuals exercising their right of free movement and cover multiple benefits, including sickness, maternity and paternity, unemployment and retirement benefits.

The regulations mean employees and their employers are subject to the laws of, and pay contributions in, one member state for the same employment – thereby avoiding possible dual social security liabilities and compliance burdens. People are entitled to equal treatment – for example, a non-UK EU national living in the UK is eligible for the same UK benefits as British nationals living here. All periods of insurance, work or residence are taken into account to calculate an individual’s benefits, so there are no gaps in the social security records.

These regulations will cease to apply on Brexit. It is not clear what will replace them but there are three possibilities:

1. The UK agrees with the EU to continue to apply the substance of the regulations (Switzerland has done this).

2. The UK applies or negotiates bilateral agreements with the 27 remaining member states. Existing bilateral deals were negotiated at a time when modern working practices were not contemplated and there are differences between these agreements.

3. Domestic legislation applies. Change is clearly coming and businesses need to prepare.

At Johnston Carmichael we are keeping a close eye on developments.