By Andrew Goodall BrexitBudget 2018: tax reliefs under scrutiny5 Oct 2018 Now that the party conferences are over, what changes to the UK tax landscape can we expect to see in the coming months? It is not yet clear how the government will meet the prime minister’s commitment, announced in the summer, to increase National Health Service funding by £20.5bn a year in real terms by 2023. Theresa May has vowed that a post-Brexit Britain will offer the lowest rate of corporation tax in the G20, and the Conservatives pledged at the 2017 general election not to increase the level of VAT.As Philip Hammond, the chancellor of the exchequer, prepares to deliver his budget on 29 October, tax issues continue to be overshadowed by the wider Brexit controversy.Recent experience suggests that the government is unlikely to try to increase rates of income tax or national insurance contributions.Reviewing tax reliefsAAT has argued that higher investment in public services can be funded without increasing tax rates or public borrowing. The reforms set out in its 4 September report would provide a “simpler, fairer alternative”, and could deliver £27bn in annual savings, AAT said.The recommendations included restricting pension tax relief to 20%, replacing fuel duty with a “pay as you drive” charge, the removal or restriction of certain inheritance tax reliefs, and switching the liability for stamp duty land tax from the buyer to the seller.AAT is not alone in suggesting a review of tax reliefs. While some reliefs may have a positive impact, capital gains tax entrepreneurs’ relief has very little merit, according to Adam Corlett, senior economic analyst at the Resolution Foundation. The question for those seeking extra cash for the NHS is likely to be “what is the least bad tax rise”, Corlett said, adding that the chancellor “needs to take a long, hard look at ER: quite likely the worst tax relief in the UK”.The budget is likely to set out the government’s response to several consultations have addressed aspects of the tax system that require careful consideration rather than quick fixes. Tax professionals have called for any extension of new rules for off-payroll working to the private sector to be delayed.In a consultation on employment status the government undertook to consult further on any significant changes, given that employment status has “wide reaching effects”. A call for evidence on the VAT registration threshold was intended to help the government consider the impact of the current threshold on small businesses. We can also expect the government’s response to a technical consultation on the draft finance bill published in July.Brexit, customs and VATRegardless of the outcome of the Brexit talks, leaving the European Union will have significant tax consequences, and there is a great deal of uncertainty over changes that may well affect businesses in just six months’ time.May has pledged that the UK will leave the EU customs union. She has undertaken to set out a revised proposal for a “backstop” arrangement intended to ensure that, in the absence of a Brexit agreement, there would be no need for a hard border between Ireland and Northern Ireland. Addressing the Conservative party conference on 3 October, May urged MPs to back the other key elements of her Chequers plan. But reports have suggested that the government is reviewing its proposal for a facilitated customs arrangement (FCA) with the EU.The government’s July 2018 white paper said the FCA would remove the need for customs checks and controls between the UK and the EU “as if they were a combined customs territory”. The UK would apply the EU’s tariffs on goods intended for the EU, and apply UK tariffs for goods intended for the UK. But Michel Barnier, the EU’s chief negotiator, has said the EU cannot delegate protection of its customs union, or collection of its customs revenue, to a non-EU country.Preparing for no-dealThe current impasse has made a no-deal Brexit more likely. The government has issued technical notices advising individuals and businesses on how to prepare for a no-deal scenario. These include guidance on trading with the EU. HM Revenue & Customs wrote in September to 145,000 VAT-registered businesses that trade only with EU countries, setting out changes that would affect them from April 2019 in a no-deal Brexit. It is estimated that a further 100,000 businesses, not registered for VAT, would also be affected. Reflecting the lack of progress on the Irish border issue, HMRC said it would update its guidance on customs arrangements “in due course”.Business groups have warned of the possibility of serious disruption following a no-deal Brexit. Tax professionals have pointed out that, from April 2019, many businesses would have to deal with the introduction of both new customs procedures and quarterly reporting under the Making Tax Digital for VAT programme.Hammond was expected to deliver the budget in late November, but brought it forward to avoid the aftermath of negotiations – now expected to run to mid-November – on an EU withdrawal agreement. Businesses will be looking for signs of an end to the current, damaging uncertainty. Andrew Goodall is a freelance tax writer and journalist.