Latest advice from government if we leave the EU

The chances of a no-deal Brexit appear to grow stronger and weaker at the same time and there is a small chance by the time this article is published that the UK may have left the EU by default. 

In a pamphlet recently published by the government we are provided with some important areas to consider if we leave the EU without a deal. For example, any UK business that imports or exports goods will be responsible for making customs declarations and businesses that trade with the EU should ensure they register for a UK Economic Operator Registration and Identification (EORI) number as soon as possible. This identification number will be required even if the business appoints a customs agent to assist in making customs declarations. 

Some other areas that should also be considered as we prepare to leave the EU are also highlighted in the pamphlet, these include:

  • Possible changes to the way in which personal data is handled if you transfer information into the UK.
  • The possibility of new rules to be complied with if you provide services or operate in the EU. 
  • Manufacturers will need to be aware of regulatory requirements for UK and EU markets, including labelling, approvals and testing.
  • No immediate action will be required if you employ EU citizens. 
  • The government has guaranteed any funding secured through EU programmes until the end of 2020.
  • If you hold intellectual property, there may be changes that affect copyright, patents, designs and trade marks.

Dormant assets scheme expanded

Under the current scheme, banks and building societies transfer the money held in dormant accounts to a central reclaim fund. The reclaim fund is responsible for managing dormant account money, meeting reclaims and passing on surplus money to various charities for reinvestment in the community. The original account holder retains the rights to repayment upon providing satisfactory proof that the money is theirs. 

The existing dormant accounts scheme came into effect in November 2008. The scheme defines a dormant bank account as an account which has been continually open for at least fifteen years during which time no transactions have been carried out by the account holder or at his or her instruction.

In June 2019, the government has announced plans to expand the dormant asset schemes to include a wider set of financial assets beyond bank and building society accounts. The government appointed four 'industry champions' to expand the dormant assets scheme. These experts represented the banking, securities, insurance and pensions, and investment and wealth management sectors.

The industry-led report was published earlier this month and has made a number of recommendations on how to broaden the current scheme. Government ministers will now consider the recommendations in more detail.

VAT Fuel Scale Charges

The new VAT road fuel scale charges have been published. The changes amend the VAT scale charges for taxing private use of road fuel to reflect changes in fuel prices.

The new fuel scale charges must be used by companies from the start of their next prescribed accounting period beginning on or after 1 May 2019. The fuel scale rates continue to encourage the use of cars with low CO2 emissions. 

The revalorisation of fuel scale charges is no longer part of the Budget process and the tables are published by HMRC annually.

Where the CO2 emission figure is not a multiple of five, the figure is rounded down to the next multiple of five to determine the level of the charge. For a bi-fuel vehicle which has two CO2 emissions figures, the lower of the two figures should be used.

The meaning of trade for tax purposes

Interestingly, there is no statutory definition of ‘trade’. The only statutory reference to the term states that ‘trade’ includes a ‘venture in the nature of trade’. This absence of statutory clarity has left definition – is a certain activity a trade or not – to the courts, and they have set some established guidance. 

This effectively suggests that the term ‘trade’ can be taken to refer to operations of a commercial kind, by which the trader provides to customers for reward with some kind of goods or services. 

The courts have also found the so-called ‘badges of trade’ tests to be helpful indicators of trading in some cases. The tests, whilst not conclusive, are used to help determine whether an activity is an economic / business activity or merely a money-making side line to a hobby. 

It is clear from the significant amount of case law on this subject that a decision on whether there is indeed a trade is often not black and white. Even if HMRC consider that the activities in question are a trade, taxpayers can make up to £1,000 per year from their ‘trade’ using the trading allowance that was introduced in April 2017. 

Corporation Tax loss relief for losses carried forward

Corporation Tax relief may be available where your company or organisation makes a trading loss. The loss may be used to claim relief from Corporation Tax by offsetting the loss against other gains or profits of the business in the same or previous accounting period.

The loss can also be set against future qualifying trading income. Any claim for trading losses forms part of the Company Tax Return. The trading profit or loss for Corporation Tax purposes is worked out by making the usual tax adjustments to the figure of profit or loss shown in your company or organisation’s financial accounts.

Some of the basic requirements for a trade loss to be set off against other income sources include: 

  • being within the charge to Corporation Tax 
  • the trade must be carried on a commercial basis and with a view to the realisation of profit 
  • at least some of the trade must be carried out within the UK

The rules for the Corporation Tax treatment of carried forward losses changed from 1 April 2017. The changes increased flexibility to set off carried forward losses against total profits of the same company or another company in a group whilst at the same time introduced new restrictions as to the amount of profits against which carried forward losses can be set. Any losses carried forward prior to 1 April 2017 fall under the old loss relief rules and must be handled accordingly. 

Dormant bank accounts

There is a free tracing service called ‘mylostaccount’ to find lost bank accounts. The service brings together the three tracing schemes of the British Bankers’ Association (BBA), the Building Societies Association (BSA) and National Savings and Investments (NS&I) into a single website (www.mylostaccount.org.uk) and is free of charge.


The service offers a way for savers to search for their lost accounts by enabling them to complete one form to search the majority of banks and building societies and National Savings & Investments (NS&I). An account may be defined as ‘lost’ if you have not made any withdrawals or deposits for a set period (typically three years in the case of a savings account and one year for a current account) and the bank has not heard that you wish to keep the account open. The monies remain the account holders property but may need to be searched for as a lost account.


The government’s dormant assets scheme allows money in accounts that have been dormant for at least fifteen years to be made available for certain qualifying charitable and community causes. The original account holder retains the rights to repayment of any monies within the scheme after providing satisfactory proof that the money is theirs.

How is ordinary commuting defined for travel costs

As a general rule, there is no tax relief for ordinary commuting. The term ‘ordinary commuting’ is defined to mean travel between a permanent workplace and home, or any other place that is not a workplace. Case law has also confirmed that travel between home and a permanent workplace is ordinary commuting even where home is also a workplace.


In practical terms this means that there is no deduction for the cost of travel between an employee’s permanent workplace and:



  • an employee’s home (with some limited exceptions), or

  • any other place the employee visits for reasons that are not related to the employment, or

  • any place at which the employee performs the duties of another employment.

Any journey between an employee’s permanent workplace and home or any other place at which the employee’s attendance is not necessary for the duties of that employment, is ordinary commuting for which no deduction is due.


The rules are different for temporary workplaces where the expense is allowable. A workplace is defined as a temporary workplace if an employee goes there only to perform a task of limited duration or for a temporary purpose.


There are specific exemptions from tax for works bus services and subsidies paid to public bus services as well as for the provision by an employer of bicycles, and cycling equipment in order to encourage environmentally friendly transport between home and work.

CGT – transfer of partnership to an LLP

Limited Liability Partnerships (LLPs) retain the flexibility of a partnership with the added advantage that a partners personal liability is limited. At least two members must be ‘designated members’ and the law places extra responsibilities on them.


For Capital Gains Tax purposes, the transfer of a business from a partnership to a LLP will not constitute a disposal by the partners of their interests in the original partnership’s assets unless their fractional interests in partnership assets are changed as a result of the transfer.


In addition, the transfer to an LLP of a partner’s rights to an annuity and/or the transfer of obligations to former partners in respect of annuities will, not be regarded as a chargeable disposal by the original partnership provided that the rights remain substantially the same.


The formation of an LLP is generally more complex and costly than that of a conventional partnership. Problems can still arise when there are disagreements between the members. There is also the prospect of paying more tax on high profits than for companies.

Carry forward of unused pensions allowance

The annual allowance for tax relief on pensions has been fixed at the current level of £40,000 since 6 April 2014. Since April 2016, the annual allowance has been further reduced for high earners. Those with income in excess of £150,000 will usually have their allowance tapered. For every £2 their income exceeds £150,000 the annual allowance is reduced by £1, up to a maximum reduction of £30,000 for individuals whose income is over £210,000.


However, any unused annual allowance can usually be carried forward to the current tax year and added to the current year’s annual allowance. The calculation of the unused annual allowance that can be carried forward can be complicated especially for those subject to the tapered annual allowance. There were also special transitional rules for tax year 2015-16 to align existing and new pension input periods known as the post-alignment and pre-alignment tax year. This meant that from the start of the 2016-17 tax year all pension input periods have been tax year based.


For the tax years 2016-17 to 2018-19, individuals can carry forward any annual allowance that they have not used in the previous four tax years to the current tax year, as follows.



  • For tax year 2016-17 – from the post-alignment tax year, the pre-alignment tax year, 2014-15, 2013-14.

  • For tax year 2017-18 – from 2016-17, the post-alignment tax year, the pre-alignment tax year, 2014-15.

  • For tax year 2018-19 – from 2017-18, 2016-17, the post-alignment tax year, the pre-alignment tax year.

It is usually not possible to carry forward any unused annual allowance from the post-alignment tax year. Typically, this means individuals can carry forward unused allowance from up to three of the four previous tax years.

Air Passenger Duty changes

Air Passenger Duty (APD) is a departure tax levied on most air travel. Each geographical band has two rates of Air Passenger Duty, one for standard class and the second for ‘other’ higher classes of travel (usually premium economy / business / first class).


The band A (short-haul) rate ranges from £13 for a standard class journey and £26 for an ‘other’ class of travel remain unchanged from 1 April 2019. The Band B (long-haul) rates for journeys over 2,000 miles range from £78 to £172 a small increase over the 2018-19 rates.


Passengers using certain classes of private jets face even higher charges. The short-haul band remains frozen at £78 but the long-haul rates have increased to £515 (from £468).


Children under 16 are exempt from APD when travelling in standard economy class. There are also exemptions from APD for flights from airports in the Scottish Highlands and Islands as well as an exemption for direct long-haul flights departing from Northern Ireland.