Date posted: 17/10/2019 5 min read

What’s the bright side to Brexit for Aussie and Kiwi businesses?

Andrew Oury CA sees a post-Brexit UK trade deal as a boon for Aussie and NZ exporters and any staff keen on a London stint.

In Brief

  • If Brexit goes ahead, the UK could become a market for fresh produce and other goods from Australia and New Zealand.
  • Trade deals with the UK would come with favourable immigration terms for Australians and New Zealanders.
  • Brexit will have an impact on VAT for exporters who previously on-shipped their goods from the UK to the rest of Europe.

It looks like Australia may be the first nation to confirm a trade deal with the UK post-Brexit. Talks have also been held with New Zealand in readiness for a UK-NZ free trade deal.

This is good news – particularly for Australia’s agriculture sector, which has been shut out of the UK market since Great Britain joined the European Union (EU) back in the early 1970s. (You could, however, still buy New Zealand lamb in UK supermarkets, but not in any significant quantities.)

If Brexit does come to pass, we are set to see a new world order, with the Brits likely to open the door to fresh produce from Australia and New Zealand. Britain, after all, is a country that relies heavily on imports, as its own farmers are not set up to produce enough food for the population. We have seen how enthusiastically UK drinkers have taken to Australian and New Zealand wines, and there’s every reason to expect their response to Antipodean foodstuffs will be just as warm.

Any trade deal is expected to come with favourable immigration terms for Australians and New Zealanders relocating to the UK. British officials have already stated that countries confirming trade deals quickly will benefit in this way, so companies can move staff easily into new UK posts to take advantage of the business opportunities.

Andrew Oury CA Picture: Andrew Oury CA.

“Any trade deal is expected to come with favourable immigration terms for Australians and New Zealanders relocating to the UK.”
Andrew Oury CA

Plans by Qantas to trial a non-stop flight between Sydney and London is just one more reason to anticipate a boom in Australian food products being shipped to British consumers.

Helping Australian and New Zealand businesses penetrate the UK

So all looks set in terms of the UK market opening up for Australian and NZ commerce. But how best can businesses and their advisers prepare?

An important first step is to understand just how different the UK market is. It’s wrong to assume it’s exactly the same because of our common language (well, almost!) and legal systems. The devil is in the difference.

For instance, the UK’s Sale of Goods Act and its Unfair Contract Terms Act are two statutes to study carefully, as they provide much stronger protections for consumers than Australian businesses may be used to. This includes ‘cooling off’ periods where products and services are pressure-sold; greater rights to return goods; and laws around faulty goods, or products that have been over-sold and are not living up to their promise.

Businesses and their advisers should make sure to arm up with local legal and accounting advice so they don’t fall foul.

And while Aussies and Kiwis may be used to taking a ‘lighter’ approach from a legal perspective, the Brits do expect appropriate legal documentation that accurately reflects the nature and risk of the commercial arrangement.

VAT issues if the UK leaves Europe

Britain’s numerous tax treaties will be unaffected by Brexit, because they operate country by country, rather than federal Europe-wide. So as to the tax treatment of Australian-UK and NZ-UK transactions post-Brexit, it should be business as usual.

The bigger issue in tax arises with the UK’s value-add tax (VAT), particularly for those dealing in goods, as this does operate federally as far as the EU is concerned. That will change if Brexit goes ahead, and is significant for those Australian and NZ businesses looking to the UK as a gateway into Europe.

At the moment, if you import goods into the one EU country and pay VAT and duty, not only are you at liberty to register for VAT in the UK (it is not easy to register in other European countries due to requirement for fiscal VAT representation) and reclaim the tax, but you can ship those goods within Europe freely with no extra levies. Moreover, you are entitled to sell up to €35,000 worth of those goods to non-business customers in any EU country without having to register there.

Brexit would have two significant impacts: first, that the UK can no longer be used as an entry point to Europe as a whole for VAT purposes; and second, it can no longer be used as a point from which to onward-ship goods to consumers and claim the €35,000 allowance. But for Australians and New Zealanders interested in the UK as a primary market, rather than a doorway to Europe, this will not dampen the opportunity.

In one sense, the strengthening of Aussie and Kiwi trade partnerships with the UK is righting a previous wrong: these countries are culturally much closer than, for example, the UK and the USA. When the UK joined Europe in 1973, that special trading relationship with both Australia and New Zealand was damaged. Brexit could be a positive opportunity to repair that damage and create a mutually beneficial, fruitful relationship between our countries that will last long into the future.

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