Brexit ― impact for UK companies

Produced by Tolley
Brexit ― impact for UK companies

The following Corporation Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Brexit ― impact for UK companies
  • EU law and related legislation
  • UK position prior to IP completion day
  • Post implementation period position
  • Withholding taxes
  • UK position prior to IP completion day
  • Post implementation period position
  • Actions points to consider
  • State aid impact
  • UK position prior to IP completion day
  • More...

The UK negotiated a Withdrawal Agreement and left the EU on 31 January 2020 (referred to as ‘exit day’) with an 11-month implementation period up to 31 December 2020.

During this implementation period, the UK was no longer a member of the EU but was subject to EU laws, remaining a member of the single market and customs union. On 24 December 2020, the European Commission and UK Government announced an agreement in principle on the legal terms of the future EU-UK relationship ― the EU-UK Trade and Cooperation Agreement (TCA). The TCA was signed by UK and EU leaders and then approved by the UK Parliament on 30 December 2020, but will not fully enter into force until ratified by the European Parliament. However, the UK and EU agreed that the TCA will apply provisionally from 1 January 2021, pending full ratification by the European Parliament. The UK has enacted the EU (Future Relationship) Act 2020, which makes provision to implement the TCA in the UK.

The EU and the UK have also made a number of joint declarations, one of which affirms their commitment to countering harmful tax regimes, in accordance with Action 5 of the BEPS Action Plan.

While exit day was important in terms of being the date the UK ceased to be an EU member state, the majority of key domestic tax changes associated with Brexit take effect from the end of the implementation period (specifically, 11pm (GMT) on 31 December 2020, referred to as ‘IP completion day’), including the full repeal of the European Communities Act 1972, incorporation of retained EU law into the UK domestic legal regime, and the commencement of associated Brexit legislation and statutory instruments.

For companies, there are several areas of UK tax law that are significantly impacted by the withdrawal from the EU. Most notably, Brexit affects the treatment of international transactions between groups of companies that operate across multiple EU member states. However, the impact

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