Category Archives: Society

Britain, Economic, European Union, Government, Politics, Society

Brexit: The Single Market & Related Options

BREXIT – ACCESS TO MARKETS

Single-Market

Brexit Briefing: The Single Market

AS Brexit negotiations begin to extricate the UK from the European Union, one of the biggest factors ministers will have to contend with is the issue of the single market. The EU has said that Britain will not be allowed to benefit from the free-trade arrangements once it has left the bloc, a major part of why the EU exists for the mutual benefit of constituent members. So, if the UK were forced to leave the single market (very much against its wishes), what could we end up with?

. The Norway Model

MEMBERSHIP of the European Economic Area (EEA) would put Britain alongside Norway, Iceland and Liechtenstein, and is what Remainers mean when they talk about staying in the ‘single market’. It would keep existing trading rules but take Britain out of the Common Agricultural Policy. However, we would also have to swallow EU laws without being able to influence them, accept rulings by European judges and carry on paying into the budget (Norway’s fee is estimated at around 90 per cent of the UK’s per person). Uncontrolled immigration would continue. Unacceptable to Tory Eurosceptics.

. The Swiss Model

A SORT of EEA minus. The Swiss are members of the European Free Trade Association but not the EEA. They have a series of bilateral trade deals with the EU, which cover trade in goods but very little in services such as banking. The Swiss can negotiate trade deals with third countries, but also make a huge financial contribution to the EU. They are inside the passport-free Schengen zone and have to accept free movement. This option is also toxic for Eurosceptics.

. The Ukraine Model

A JANUARY 2016 agreement between the EU and the Ukraine could form the basis for the UK deal. It includes trade market access and co-operation on defence and security but doesn’t require free movement or the application of EU law. However, the UK would also require a deal on financial services.

. PM’s ‘free trade deal’

IN JANUARY, the Prime Minister said she wanted a ‘deep and special partnership’ covering trade and security. At the same time she says – echoing the Leave campaign – that Britain should take back control of its laws, borders and money. That means no acceptance of EU laws, no more free movement and an end to ‘vast contributions’ to the EU budget. Open issues include immigration rules, how much the UK pays to belong to EU agencies such as Europol, the ‘divorce bill’ and what the new trade rules are. The time it takes to implement such a deal could give Mrs May room for manoeuvre.

. No deal

BRITAIN would revert to World Trade Organisation rules – meaning tariffs on some goods and services. Likely to mean no ‘passporting’ rights for the City of London to trade on the continent. It would create a legal and administrative vacuum on the rights of EU nationals in the UK and British ex-pats, the Irish border, security co-operation, and deals on aviation, agriculture and fishing. Chaotic in the short term.

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Business, Government, Legal, Society, Taxation

New tax offence to be made within Criminal Finances Act 2017

TAX EVASION

The UK Government is expected to bring into force a new tax offence in the Criminal Finances Act 2017. It is likely to become law in September.

What is startling about the new offence is that it will make a business guilty as a result of the criminal conduct of its employees and others who may act on its behalf.

Where an individual facilitates tax evasion the business will be guilty of failing to prevent that facilitation unless it can demonstrate that, at the time of the employee’s conduct, it had appropriate procedures in place to prevent facilitation arising.

This new offence will have an immediate impact for many firms. Implicitly, it also shows the UK Government’s preferred direction of travel for corporate liability, i.e. to criminalise business for the actions of connected persons.

The new tax offence will be of concern to banks, accountants, Independent Financial Advisors, and to anyone providing tax advice. Businesses are now eager to know what they should have in place to make sure that employees and others who act on their behalf are not facilitating tax evasion for clients and customers. They will also want to know how they can show that they have taken every reasonable step to prevent the facilitation of tax evasion in the first place. An organisation that is criminalised because of the actions of its employees or third parties will have serious implications for its long-term future and health.

There are some easy first steps that businesses can take to strengthen their position. Policies and procedures in place at present should be reviewed, with an emphasis on explaining to people what is and is not acceptable. These should be updated if it is deemed necessary in clarifying the position. Any procedural improvements should be freely communicated to all employees and others providing tax services for the business.

To understand the wider direction of travel for corporate liability we need to understand why there is a need for change. The historic approach to successfully prosecute a company required the identification of a person in the business who possessed a “directing mind and will” and who, specifically, condoned or was aware of the crime. Known as “the identification doctrine” there are a number of difficulties with applying this approach. For example, it may not be difficult to identify the ‘directing mind’ in a family-owned run business where all of the major decisions are taken by a small group of people. It is quite another for a prosecutor to identify the directing mind within a global business that has a complex structure and sophisticated approach to decision-making.

The new offence follows the same methodology and approach as the Bribery Act.

The UK Government has also been consulting on wider reform of corporate crime. One of the options being given serious consideration is a wider roll-out of the “failure to prevent” approach across the spectrum of economic crime. This will place an onus on a business not only to show that it has done no wrong, but also to demonstrate that the organisation is properly policing its employees and others acting on its behalf. Whilst not quite the end of the presumption of innocence until proven guilty, any firm who allows their employee or connected person to break the law had better have a very good story to tell.

 

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Climate Change, Environment, Europe, Government, Politics, Society, United States

The Paris Climate Accord teeters on the brink thanks to Trump

PARIS CLIMATE AGREEMENT

Donald Trump’s recent announcement that he was pulling the United States out of the Paris Climate Accord was met with dismay by many around the world. But Mr Trump has done what few politicians are capable of by actually doing what he pledged prior to being elected. Many businesses would agree with President Trump, saying that the agreement was ‘a self-inflicted major economic wound.’

The UN Climate Change conference in Paris in November 2015 was a last-ditch and desperate attempt to get any kind of agreement and by getting the reluctant developing nations on board. These annual climate conferences have been going on now for over 22 years. Each symposium, in mostly exotic locations, have seen tens of thousands of delegates flying in for the gatherings and creating thousands of tonnes of additional and unnecessary emissions. Their personal carbon footprints are the polar opposite of what they claim to be aiming for, a reduction in greenhouse gases to prevent the calamities of global warming.

The Paris Accord had many objectives, among them an agreement for nations to have targets in reducing emissions. But these were written into the treaty as being voluntary, not legally binding, and there are no penalties for failure. That of course does not include the UK and Scotland who recklessly passed legally-binding Climate Change Acts in 2008. China, one of the world’s biggest polluters through its heavy use of fossil fuels, said it would not be reducing its emissions until after 2030.

Scientists have said that the ‘promises’ made in Paris amount to less than half of what is essentially needed to stop a litany of runaway global disasters. We may be inclined to ask where the rest is to come from? Population control? Consider the statistical data: 1995 – 5.7billion; 2017 – 7.5billion; 2050 – 9.7billion; 2100 – 11.2billion.

A key aspect of getting the developing nations to agree to the Paris Accord was the commitment from the richest nations to contribute £78billion every year to the Green Climate Fund. This was aimed in helping poorer countries make the costly shift to cleaner energy sources and to shore up defences against the impact of climate change. The UK promised £720million but President Trump has now withdrawn America’s £2.3billion.

Already, many East European states – amongst them Poland, Hungary, Slovakia and the Czech Republic – are mounting a behind-the-scenes revolt against the Paris Agreement.

America is now energy independent, with its abundance of shale gas. Mr Trump’s desire to un-mothball many coal mining sites in the US by making them fully operational again is vindicated if we consider the enormous tonnage of coal exported to Europe, America’s best customer. Europe relies, too, on Russian gas for one-third of all its supplies. Coal, oil and gas are the nemesis of the green lobby.

China, which accounts for 30 per cent of global emissions, is deliberately leaving its coal reserves in the ground for a rainy day. Meanwhile, it is importing coal from America and Africa. A host of countries – China, India, Japan, Germany, South Korea, South Africa, Turkey, the Philippines, as well as countries within the EU – have plans to build an additional 1,892 coal-fired plants to the existing 3,722.

The theory of global warming and climate science has become almost a religion with a cult following, while the renewables revolution has been an environmental disaster. EU countries are planning to significantly increase the number of trees they cut down and burn, thus greatly reducing the forest carbon sink they would otherwise provide. They have completely ignored the fact that new trees will take 20 years to grow before they absorb the equivalent of the CO2 released by burning.

Crucially, without American financial support the Paris Agreement will collapse. It will do so because other Western countries will be unwilling to shoulder a share of the £2.3bn that the U.S. will no longer contribute.

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