Gary Heynes, head of private client at accountancy firm RSM, has revealed the potential winners and losers as a new tax regime evolves outside of EU oversight.
He said cases were heard in the European Court of Justice where the judges ruled in favour of EU taxpayers because another EU country had treated them more harshly than local residents.
This included social security charges on property sales in France, inequitable inheritance tax laws in Spain and CGT reliefs in Germany only available to residents.
Mr Heynes said it was reasonable to conclude that such protection will not be available in the future and EU countries will be able to treat UK residents as they wish, with no concern for discrimination.
But Mr Heynes said while protection may not be available, we could see greater benefit in an independent tax system.
For example, under current rules when new tax reliefs are proposed, EU “state aid” approval is needed.
This applies to reliefs such as EIS and social investment relief, to ensure that such reliefs do not provide a disproportionate advantage to organisations which would be uncompetitive.
With a break from EU regulation, Mr Heynes said the UK could be free to introduce greater tax reliefs to benefit who we choose on our own terms and open further opportunities for tax efficient investments.
Mr Heynes said we should also consider whether now is the time for stability in the UK, especially among wealthy individuals who can easily relocate if they consider the UK is no longer a suitable jurisdiction for them.
“The referendum has already held up around 40 pieces of tax legislation and this includes significant changes for non-doms, due to be effective from 6 April 2017,” he pointed out.
“The government will need to ask themselves whether this is a good time to impose greater taxes for the wealthy.
“With the uncertainties Brexit has created, the anticipation that a new government will not be formed until the autumn and the likely need to ensure that the UK remains attractive, delaying significant changes for non-doms may well be more appropriate.”
Dermot Campbell, chief executive of Kuber Ventures, agreed Brexit will have a significant impact on the investment industry.
“Traditionally, the industry has been heavily constrained by EU directives because of the requirement to obtain lengthy approvals for amendments to certain schemes e.g. modifications to the social investment tax relief rules that have been proven to be extremely complex,” he stated.
“Ultimately, this decision will likely result in more freedoms for tax incentives/reliefs and schemes such as the venture capital trust scheme and enterprise investment scheme could become even more important to our economy as the need for inward investment to the UK will continue.”
Earlier this week chancellor George Osborne ruled out an emergency Budget following last week’s referendum, which saw 51.9 per cent vote to leave the EU.
