Thank you Donald Tusk for the solution to the UK leaving the EU.

It’s weird.  What was Mr May on when running through wheat fields in her youth?   Is she still on it?   Can't she see what everyone else can see?  The solution to leaving the EU is so simple and Donald Tusk has generously supplied the key.

It is quite extraordinary that Donald Tusk offers the UK the Canada ++ trade deal that the UK has being saying it wants, but the UK then rejects it suggesting instead a total Chequers dog's breakfast of a sort of half in half out mess.   Or the Japan deal.  Ok, we actually could go a lot further than Canada ++ or Japan, but in practise neither would be a bad deal.  Better arguably even perhaps than WTO, in that it would be bespoke, though WTO would have other benefits.  But much better than what’s going on now on offer from the Chequers meeting. It’s insane.   What’s Mrs May on about? Has she lost it?    

A good friend of mine runs a very successful business, a company trading with customers in every EU country and in about another hundred other counties around the world and I draw on his vast expereince in this blog.  He is looking for simplicity in arrangements and instead Chequers offers complexity.   And massive bureaucracy. Seventy percent of the sales his company make are exports with incidentally the US being his biggest single market, where they deliver on a next day basis customs cleared. Easy!   

So Mrs May, or would that be Olly Robbins, how about the following simple solution my friend argues for which would allow the UK to take up Donald Tusk's offer, allow for frictionless trade and also address the misplaced anxiety of the Irish Border which really is a total red herring.   A blanket free trade deal, as is now agreed between the EU and Japan, means that there will be no tariffs for customs to collect on physical trade between the EU and UK except on items that carry UK Excise Duty such as alcohol and cigarettes.  

Which is exactly the situation at present, as duty is payable on them on import or on release from bond into the UK market.    

Coupled with this how about utilising the current VAT and Intrastat infrastructure that governs trade between EU states, though we would not be part of the EU there is absolutely nothing to stop us continuing to use it for all non-services trade with the EU.   Only political posturing would stop it.   

The present system works as follows: 

• VAT is not levied on exports at all.     
• However VAT is paid on imports into the UK and is either paid directly to HMRC on those from outside the EU or via a trader's VAT return on imports from suppliers in other EU countries.   
• If the value of imports from the EU exceed £1.5 million per annum the trader also declares via an Intrastat declaration in detail on a monthly basis the commodities imported and their value.  
• Though there is no VAT charged on Exports to customers in EU countries, all VAT registered traders exporting to customers in the EU have to submit an EU sales list every month showing the VAT number of the EU customer and the value of the goods shipped to them.    
• If exporting more than £250,000 worth per annum to customers in the EU then a monthly Intrastat form is submitted to HMRC detailing the commodities shipped, their value, the country to which they were shipped and the order reference.   

Whilst my friend thinks it would be good to be rid of Intrastat as part of Brexit utilisation of it as it or even a slightly modified version of it would be a small price to pay to allow the UK to accept the Tusk offer, maintain an open border on the island of Ireland and keep trade with the EU relatively simple and frictionless.    

The other benefit of adopting this system is that as we sign new FTAs with other countries it would be possible to use the same system with them and thereby reduce transaction costs!  There are some that will wonder as to how we might prevent EU traders avoiding EU tariffs by shipping through the UK, for almost all goods it would be more expensive for them to do this than pay higher EU tariffs.   For situations where it may be worth doing so the importing trader always runs the risk of his import being seized and thereby losing the full value and his reputation.   

There is another argument that differences between the two regimes on the island of Ireland will be exploited by smugglers.  But this ignores the fact that at present there are two currencies, tax regimes, two Agricultural support systems, two social security systems and everyone living around the border is involved in one way or another in "smuggling" but as both sides of the border are in the EU it is at present referred to as competition!    

Surely part of the problem is the civil service.  Well meaning they no doubt are, but perhaps if they  apply rather more of the 'Can do' attitude that UK small business is famed for rather than the pathetic declinist groupthink that seems to be emanating from the civil service, we would be better served.
 
The thing is, small businesses already trade under WTO (indeed 60% of UK trade is under WTO already) so small businesses are well used to trading internationally.