The day the UK decided to break away

Brexit becomes reality

June 24th 2016 – an historic day for the United Kingdom as the voting population opted to leave the European Union in favour of national independence. Unsurprisingly, today everyone wants to know what leaving the EU really means and how it will affect them. Well, it seems no one could get hold of a crystal ball to see what’s around the corner so in the immediate term, we simply don’t know what’s to come or when it will come. It is certain that anything that is going to happen will be slow. Our pre-voting day blog considered issues that contractors will be most interested in and for now we can offer no more direction on how this monumental outcome will specifically impact contractors.


The process of leaving will be no mean feat. With the UK now facing many years of negotiations, we have to employ a ‘wait and see’ policy while talks are held, old deals are undone and new ones struck. This uncertainty could benefit contractors as companies wishing to employ a cautious approach to boosting their business may favour hiring temporary resources with specialist skills that can be brought in and out more easily than permanent employees. Donald Tusk, EU Council President, has been quick to reassure the UK that during its two year withdrawal period from the EU we won’t lose our rights and must still honour our responsibilities.


This morning Bank of England Governor Mark Carney warned us all to expect “some market and economic volatility”. Indeed the exit announcement triggered the biggest one-day fall in the Pound (10%) since 1985 and the Sterling has been bouncing up and down in the past 24 hours and is likely to yo yo more over the next few days. This was always going to be the case with such a fundamental shift in world economics. And the Prime Minister’s resignation was always going to be next on the cards if Brexit became a reality. But Carney has also unveiled the bank’s ‘Plan B’ which involves £250bn to see the economy through this inevitable period of uncertainty. He attempted to reassure the public and media that Britain’s banks are robust and have been subject to rigorous stress tests to deal with huge volatility.  It seems par for the course that we’ll need to see another recession through. We have recently come out of one and are familiar with employing austerity measures to build a stronger economy.


Whether you wanted in or out, it’s important that we respect each other’s views and now work together to build a stronger Britain. Yesterday’s vote saw the highest turnout since the 1992 General Election: 72% of those eligible to vote turned out to the polls, with 52% opting for Brexit. So in the immediate term these people at least will be supporting our outgoing and new Prime Ministers to build a more independent nation. Of course, Cameron’s successor will hope that as things become clearer there will be a better feeling about the UK’s life outside of the EU. Given that 48% wanted to remain, their voice will still be heard and negotiations are unlikely to be radical. They will be done by serious people looking for sensible outcomes.


European Commission President Jean-Claude Juncker suggested earlier this month that a deserter would not be welcomed with open arms. The UK still holds a strong position and has a significant contribution to make on the world’s stage so the reality is unlikely to be as devastating as first feared. Norway and Switzerland have strong trade agreements in place, despite not being an EU member so there’s no reason why Britain can’t achieve the same. Other economic powers will want stability as much as our own Government so it seems a reasonable bet that they will want to sit round the table and work out ways to keep stability as much as possible…and they’ll want to do it soon. After all, this is a worrying time for those countries remaining in the EU as a key player has left the game. Although he feels he’s “not the right captain to steer the country to its destination” Cameron has vowed to stay on and help steady the ship until his replacement takes over in October.


A quick glance at how votes were divided across the nation raises the question of just how united the UK will remain. Scotland and Northern Ireland voted to remain and Nicola Sturgeon has already suggested a new Scottish Referendum is highly likely. But there’s also the strong likelihood of other EU countries now reassessing their membership, so perhaps we should be asking ‘who’s next?’ France? Italy? The Netherlands? That opens up a wider debate about what might happen if the EU as we know it (at least up until 4:00am this morning) breaks up altogether. That’s a discussion for another day…


For now, no one knows how long this rollercoaster will last and how many twists and turns it will have. The UK’s contractors need to continue to deliver business as usual and apply their valuable skills to bolster our economy. This is a once in a lifetime opportunity for us all to take control and help shape the future.
As Britain’s Contractor Champion Intouch will be there voicing the concerns and ideas of the UK’s independent workforce. We will continue to advise our customers on the best way to run their Limited Company based on their individual circumstances and will be keeping a keen eye on developments to ensure you receive the contractor-centric interpretation. Make sure you’re with us for now and the future.


This blog has been prepared by Intouch Accounting. While we have made every attempt to ensure that the information contained in this blog has been obtained from reliable sources, Intouch is not responsible for any errors or omissions, or for the results obtained from the use of this information. This blog should not be used as a substitute for consultation with professional accounting advisers. If you have any specific queries, please contact Intouch Accounting.

The EU referendum – to Bremain or to Brexit? That is the question!

The EU referendum

This is it, we’re on the home straight towards arguably the most important vote in our lifetime and one that will impact this and future generations. But the issues which determine whether to Brexit or Bremain are still being hotly debated across the UK.


So much of the spin doing the rounds offers contradictory messaging. Read a leaflet from the Brexit campaign and you’ll receive one version of the facts – leaving the EU will give us a stronger economy, stronger leadership on the world stage, make for a safer nation and more money in everyone’s pockets. Read a similar leaflet from the Bremain camp and you’ll get exactly the same interpretation of the outcome based on the opposite stance of remaining where we are. To be expected really.


We’re not here to tell you how to vote in the EU referendum. There is no right or wrong way because how you vote will depend entirely on your individual perspectives and priorities. Instead, we want to give you some contractor food for thought to help you decide how to use your vote on 23 June.


The truth is no one can be sure what a Brexited Britain would look like financially, fiscally or economically, but undoubtedly a period of volatility or, more likely, instability would ensue.


How long that may last is the same as the length of a piece of string or the time some poor agencies take to pay contractor’s invoices – who knows?


If we do vote leave, there is little doubt that UK contractors and freelancers will be affected. Whether this turns out to be a good thing or a bad thing for you will depend on so many factors, especially those which affect your clients and their business. Also relevant are the demand for your skills and the ability to source those same skills elsewhere, your age, financial situation, nationality, domicile, the industry you work in, and which European territory you expect to work in (including the UK).


Here we explore issues we think contractors will be most interested in.


Tax consequences of Brexit

A decision to leave the EU on 23 June will not change the UK tax system overnight. In fact it is unlikely anything would change until a framework for exit had been negotiated with the EU. The UK would have two years for that to happen (and longer if all member states agree). However, although there would be no overnight changes the UK government would want to set out its roadmap for change fairly quickly and we could expect an emergency Budget soon after an exit decision.

An emergency Budget may have some changes to taxation or accelerate changes anticipated, but the focus is more likely to be on the roadmap alone.


Trade agreements

An exit decision will have no immediate effect on existing trade with the EU or agreements to which the UK is itself a signatory. But if the exit formally occurs the UK will lose the benefit of existing trade agreements with countries agreed at EU level and of course the agreements itself with EU member states. However, the UK is a member of the World Trade Organisation (WTO) in its own right and would retain the limited benefits that “most favoured nation” terms provide and its obligations as a member of the G20 and OECD would remain.


The UK would need to consider those non EU countries where trade agreements only exist from EU membership with terms to be negotiated, but as far as agreements with the EU are concerned the UK has the choice of joining the European Economic Area (EEA), the European Free Trade Association (EFTA) or negotiating its own bilateral agreements.


In the absence of membership of the EU, EEA or EFTA the UK would need to establish custom tariffs with all member states and those countries where agreement was reached at EU level. But the UK would be free to enter into negotiations with any non EU country for the benefit of the UK alone; without consideration of wider EU consequences. Arguably an easier task for the UK than reaching agreement with non EU countries at an EU level. The US is a perfect example.


Whatever course the UK takes, it would take many years to complete and it is possible that two years would not be long enough to have all the ducks in a row. This is the key concern over trade stability, the period of time these agreements take to negotiate and what those terms will ultimately be.


If the UK were to exit from the EU, whether or not it goes it alone, or joins either the EEA or EFTA, it would have total sovereignty over the UK tax system which would make it free to make changes over VAT and Corporation Tax. Some would say that from a trading perspective this would enable the UK to move forward in more dynamic ways specific to the circumstances that suited the UK and maximise its competitiveness on a global stage.


EU referendum


Working in the UK and overseas

The contracting market has been attractive to overseas workers from the start, both from within the EU and outside, particularly Asia, New Zealand and Australia. We are used to economic migration and arguably this has never been a problem. More importantly and historically immigration has always been associated with periods of increased economic prosperity. That still remains the case as agreed by both camps.


However, the Brexit camp stress the real problem is caused by an inability to control the volume and speed of immigration together with the skill sets of the migrants required in the workforce.


Contractors working abroad are highly likely to be affected and should be concerned with the weakening value of the pound against the Euro. If you live in the UK, have property here and regard it as your “home” you are likely to be sterling functional. That means it’s your main currency even if it’s not the one you are currently paid in.


Sterling exchange rates are determined by other factors too and the possible downside of a Brexit on the pound is already reflected in the exchange rate. The comforting reality is that on a commercial level skills follow demand whether that’s in the UK, EU or the rest of the world. We are a flexible and mobile workforce and if your skills make you a valuable knowledge worker sought out for key skills and expertise then the forces of supply and demand will work in your favour.



There can be no economic certainty until after the vote on the 23 June. No one really knows how the vote will go or what will happen afterwards. What is currently happening is that “exit poll predictions” are being made to stay or go on a daily basis and the “breaking news” affects the financial markets. This week the Brexit team have gained ground making exit seem closer. As a consequence the pound has fallen and share markets remain very volatile. How the non EU world reacts is largely already reflected in the stock markets and both Sterling and Euro exchange rates are bouncing this way and that. Most of the FTSE 100 (the Uk’s biggest public companies) enjoy global revenues so are protected against these “local” shifts. It’s not all doom and gloom for UK contractors.


What is definitely the case is the lead up to the vote has affected the contracting market as many companies are adopting a wait and see approach to decision making, which should come to a quick end after 23 June.


So, are contractors likely to be better or worse off in a UK outside of the EU? Or will it take a couple of years before any difference can be measured? The eventual outcome cannot be treated lightly as it will affect this and future generations. It is perhaps the most important decision many of us will ever take. Contractors and freelancers are known for their maverick spirits and a willingness to not take the easy path. Consider as much of the information you can digest and then allow your head and your heart to guide you. The UK, the EU and the world all need talented people no matter which club they might belong to.


Intouch believe the UK contracting market is strong, flexible and mobile and fully support the needs of contractors from both the UK and the rest of the world. We don’t believe we should have an opinion on what is best for the individual. That’s a decision for each to take on their own. But whatever happens we will continue to monitor how markets, trade, financial matters and taxation are affected and guide our clients accordingly.


This blog has been prepared by Intouch Accounting. While we have made every attempt to ensure that the information contained in this blog has been obtained from reliable sources, Intouch is not responsible for any errors or omissions, or for the results obtained from the use of this information. This blog should not be used as a substitute for consultation with professional accounting advisers. If you have any specific queries, please contact Intouch Accounting.