Doom-mongers tried to spin the Referendum campaign with made-up claims of BrexAgeddon, economic meltdown, if people voted to leave. That never happened of course.
Post the Brexit vote some spoilers have moved-on to spreading panic about VAT. Wrong again.
VAT was introduced into the UK in 1972 before joining the old ‘Common Market’ in 1973. It replaced the earlier Purchase Tax.
The UK has vast experience of a country leaving and formalising laws, from Ireland in the 1920s on to the Empire and Commonwealth. So, when the UK does formally leave the EU then it is a matter for the UK, alone, to decide what VAT laws it wants to keep.
The most practical thing would probably be to keep all VAT law, for inside the UK and trade with the rest of the World, as it is at the time of formally leaving the EU. Then adjust it as and when necessary.
As for a deal with the UK’s erstwhile EU partners one cannot rationally see the EU benefiting from a self-destructive trade war, such as VAT on UK-EU trade. After all, it never worked with Napoleon’s failed Continental System.
After all the EU is facing multiple crises: a stagnant economy, barbed wire borders spreading, a fractured €uro project, huge youth unemployment, mass population movements, civil unrest, Brussels undermining the NATO defence, Russia ready to get its revenge for past EU humiliations on it, etc, etc.
So probably not a good idea for the EU, as it were, already in a broken glass house to start throwing more stones.
But then if the really EU really wants to try to punish the UK for leaving, to bully smaller countries into staying, that just reinforces the UK’s democratic decision to leave a failing EU.
Perhaps the UK is not so much leaving the EU as, blinking in the sunlight, rejoining the rest of the world.
Tax Barrister, Accountant