HMRC no longer reviewing Family Investment Companies
With anti-immigration rhetoric pushing voters further towards a Brexit vote in the EU Referendum on 23 June, it is now clearer than ever that free movement of labour will no longer be part of our future relationship with the EU should the UK decide to leave. Indeed, Leader of the House of Commons, Chris Grayling has raised the prospect of restricting the free movement of EU citizens to the UK before we formally leave in order to “prevent a massive influx of people” moving here in a final rush before our borders are closed.
Despite protests during the run-up to the referendum about cultural changes and pressure on public services in the UK caused by immigration, real or imagined, the fact remains that the UK has benefitted from EU migration. Circa fifty per cent of growth since 2005 has been fuelled by the availability of EU labour. Our largest export, the operations of our knowledge-based services industry rather than car parts or widgets, relies on being able to move people to clients, and has benefitted hugely from the free movement rules.
Recent travellers around the country may have been surprised to see huge ‘Vote Leave’ billboards in farmers' fields. The agricultural sector, as well as the hospitality, hotel and catering, and construction and manufacturing industries, have all benefited from a ready supply of EU labour to fill low- or semi-skilled roles. These are all sectors which operate on low margins and the ability to hire EU employees in the same way as British employees, with no work permit required and no visa costs, is certainly attractive. It is very unlikely that successful employers like Pret a Manger would have been able to grow so rapidly and generate wider economic benefits for the UK economy without EU free movement. So why would farmers, who maintain that they are squeezed by supermarkets and on their knees, along with many other pro-Brexit SMEs, want to shoot themselves in the foot?
The post-Brexit reality for these industries is worrying. If there is no free movement of labour, it is likely that Tier 3 of the points based immigration system would finally need to be activated. To date it has been dormant as there are plentiful supplies of EU migrants. But to be able sponsor future EU migrants if the UK no longer benefits from free movement, employers will first need to register as sponsors and sign up to an intrusive compliance regime which often requires new HR systems, processes and dedicated staff to oversee it. The Home Office has been on a recent purge of sponsors, removing over 2000 non-compliant businesses from its register, so becoming and remaining a sponsor is no easy task.
Then there are the costs of sponsorship. In future, hiring EU migrants might mean paying a huge array of government visa and sponsorship costs. Currently a three-year visa would cost an employer around £1,200 and with an additional skills charge due to take effect in 2017 this would increase the overall hiring figure per sponsored employee to between £3,000 and £4,000. The government has often claimed that these costs should act as an incentive to hire local workers, but while these cost would be easily absorbed by multinational employers, lower margin SMEs simply won’t be able to pay such high sums to employ lower-paid workers, and experience and extensive research has shown that Brits simply don't want to do these jobs, even with the new national living wage.
Reclaiming sovereignty over our green and pleasant land may seem an attractive prospect for some, but Brexit is where employers (and potentially customers and consumers) will have to start paying for that privilege.
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