June 23rd is the day we decide “Remain” or “Brexit”, whether to stay in or leave the EU.
Leaving aside the political and economic considerations, what impact will this referendum have on the UK accountancy profession?
If we stay in it will be business as usual. The existing legal frameworks, the integration of the European Courts of Justice (ECJ) and their decisions as they impact legislation in the UK, will presumably continue. Past decisions will continue to influence future changes, particularly the tax code, and advisors will, in some respects, heave a sigh of relief; familiarity will have its day.
If we leave it is likely that a significant change process will occur. Two of the issues that may affect the profession include:
- Regional pressures. The Scottish National party have indicated that a “Brexit” vote would be against the interests of Scotland and we may see pressure for a further independence vote. If successful, Scotland would then seek closer ties with the EU. If this happened the Scottish tax system would surely start to drift away from its remaining UK members’ fiscal set-up? Practitioners either side of the border would be faced with operating under two, increasingly disparate tax regimes. Would Scotland’s professional Institute’s break away and adopt training programmes based purely on Scottish legislation? Firms that have clients either side of the border would have to take on increased training costs; to stay competitive these firms may have to accept a reduction in practice profits.
- Legal uncertainties. The UK legal system may need to “unstitch” its reliance on previous ECJ decisions and re-establish UK precedents. This could completely reverse existing legislation and require constant vigilance by practitioners. VAT in particular, with its reliance on various EU integrations, would be significantly affected.
To some extent, these issues will depend on the post-Brexit agreements the UK negotiates with the EU. The profession will be holding its breath.