11th March, 2020
The United Kingdom left the European Union on January 31st, 2019 following the decision in the 2016 referendum. However, it remains inside the EU VAT regime until 31 December 2020.
On January 31st, 2019, the UK left the political structures of the EU. These include the following –
– EC Council;
– EC Commission;
– EC Parliament; and
– the European Court of Justice (ECJ).
However, as part of an agreed eleven month transition period, the United Kingdom will remain within the EU trading structures:-
– the EU VAT regime;
– the Customs Union; and
– Single Market. It is very difficult to determine the implications of Brexit and more so now that the UK Government wants to put a non-extension on Brexit negotiations. I have been to some seminars on the issue and the overriding view was that still no one really knows. But, here are some of the likely issues.
The major issue that was highlighted was the fact of border checks coming into the United Kingdom and exiting the United Kingdom into the European Union. This also possibly applies incidentally from Northern Ireland to the Republic of Ireland and the reverse. You need, for each tour, to assess which customs and trade registrations, authorizations and reliefs must be put in place. These enable customs clearance and duty payments. They also meet relevant regulatory licensing requirements and secure available duty reliefs. The major customs agents or brokers are well versed in the potential issues and they will be important in easing the filing of customs declarations. Getting all production to a show on time is obviously paramount. The Calais-Dover crossing is the major United Kingdom-European Union link and any issues that arise will often arise there.
You should review with the agents the current contracts you have in place as many will lack provisions to deal with Brexit. Again, this applies in particular to customs and trade. The changing relationship between the United Kingdom and the European Union will mean that it is critical to assess all contracts. The focus should be given to determine if the buyer or seller handles fulfilling relevant customs obligations, including the lodging of customs declaration and the payment of customs duties.
CASH FLOW ISSUES
Import VAT is a duty of customs. A result of Brexit is that it now poses a cashflow challenge for companies trading cross-border with the United Kingdom. Import VAT will be charged at the border when importing goods in the United Kingdom. Border delays could exacerbate this issue.
Immigration is the one area where a clear picture is emerging. The United Kingdom has outlined details of its settlement scheme and temporary residence scheme. Systems and immigration policies will need to be reviewed and updated for the tour personnel. European Union artists may, in the future, need to meet the same criteria as those from the United States and other nationalities as of January 1st, 2021. Currently, the majority of US acts and those of many other nationalities do not need visas to tour the United Kingdom for a short amount of time. Promoter issued paperwork is usually sufficient to present on entry to the United Kingdom. This could mean more paperwork for EU acts touring in the UK and points potentially to more bureaucracy for the live touring industry. It also still remains to be seen whether the EU reacts in like manner to UK artists visiting the EU.
There will be fluctuations in currencies between the Euro and GBP£ and GBP£ and other currencies including the US$. Uncertainty will reign until the final deal is settled which may well be all of 2020. This will affect your artist overage/deal currencies and also where you utilize United Kingdom vendors. Focus on shifting the currency risk, as always, wherever possible.Philip