U.K. companies face the prospect of incurring EU withholding tax and losing preferential trade tariffs and value-added tax arrangements after U.K. lawmakers voted Jan. 15 to reject the agreement negotiated by Prime Minister Theresa May for the country’s exit from the European Union.
- Legislators voted 202-432 against the agreement after May failed to convince members of her Conservative Party to support it, increasing the likelihood of a no-deal Brexit
- Opposition Labour leader was expected to call for a vote of no confidence, where a May loss could lead to a general election
- Labour has called for higher taxes on wealthy individuals, large corporations
- In a no-deal Brexit, U.K. and EU trading agreement falls to World Trade Organization rules, where the U.K. loses its EU tax perks, and traders register immediately for VAT instead of after 85,000-pound threshold
- U.K. estimates that leaving the EU without a customs deal could cost 400 million pounds ($512 million) tax loss annually for the government