Potential consequences for cross border e-commerce. Whether the UK strikes a deal with the EU or not, the clock runs out on 29th March, 2019. As we all know that the UK voted in the referendum to leave the EU back in June, 2016. The UK Government ratified the leave bill in the parliament on 29th March 2017 and under the EU law UK had two years to pack her bags.
The UK and EU agreed on a delay until the 22nd of may if UK accepts the current Brexit conditions. If the UK votes against the current Brexit option (as already twice) the EU will postpone Brexit until 12.04.2019 only. It seams they won a little more time, but with no clear progress yet.
Will the UK really Leave the EU on 29th March, 2019?
By law the UK will not be part of the EU after 29th March, 2019 whether it has a withdrawal agreement with the EU or not. But it’s not the only way out. The UK can request the EU for more time to negotiate a deal by extending article 50 or unilaterally revoke the article 50 and decide to stay in the EU.
With recent defeat of Theresa May’s withdrawal bill in the UK parliament, the UK Government has two practical options;
The recently rejected Brexit deal took the government 19 months to negotiate which resulted in 11 resignations of MPs from within the governing party while 118 MPs of the ruling party voted against the Brexit deal presented by the Prime Minister. The UK Government presented its so called “Plan B” or ammended withdrawal agreement on 21st january, 2019 which will be voted on 29th January, 2019. But the hopes of it getting a green signal are as bright as a snowball’s chance in hell. In order to come up with an acceptable withdrawal plan the UK Government will need to extend article 50 (a fancy word to ask for more time) with the consent of the EU. Either the Government succeeds in negotiating a new deal with the EU or the opposition parties in the UK parliament succeeds in getting a second referendum, both of the options would require substantial time. This means a delayed Brexit. Opposition leader Jeremy Corbyn put forward a call for second referendum in carefully crafted wordings to avoid a backlash:
“It is time for Labour’s alternative plan to take centre stage, while keeping all options on the table, including the option of a public vote”.
Hard Brexit: No Deal
It is very unlikely to happen since many of the conservative MPs (Government party) voted against the recently tabled Brexit deal as they wanted a softer Brexit including a customs union. In addition, there is rising internal pressure on the UK Prime minister to remove a ‘No deal exit’ from the table altogether. However, if the very unlikely would happen and the UK would withdraw from the EU without striking a deal on future relationships of the two parties, there will be immediate consequences on both sides.
OK fine, but how will that effect my ecommerce business?
The UK is one of the hottest market for ecommerce. According to Ecommerce Europe and the Ecommerce Foundation’s joint 2016 European B2C e-commerce report, the UK has the highest market size in the ecommerce sector, worth €157.1 Billion.
Let’s summarise “Deal” and “No Deal” options for Ecommerce businesses.
With every passing day UK’s chances of exiting the EU on 29th March seems less likely. A growing sense is prevailing in the UK parliamentary corridors of remaining in customs union and having trade regulations which mirror those in the EU. It is practically impossible for the UK and the EU to cut off ties overnight. As said by the UK’s Defence minister Tobias Ellwood in an interview with the Times: “Leaving with no agreement would be an act of self harm with profound economic, security and reputational, consequences for the UK at the very time threats are increasing and diversifying”.
written by: Touseef Aslam is the UK accountant for hellotax, a VAT service provider for e-commerce sellers. Contact him at hellotax.com