A protester holds a poster depicting Labour party leader Jeremy Corbyn in London. AP
A protester holds a poster depicting Labour party leader Jeremy Corbyn in London. AP
A protester holds a poster depicting Labour party leader Jeremy Corbyn in London. AP
A protester holds a poster depicting Labour party leader Jeremy Corbyn in London. AP

Why Britain’s political crisis will run for weeks


  • English
  • Arabic

Is Britain heading for a pre-Brexit general election?

Theresa May faces a confidence motion after losing a vote on her Brexit deal with Brussels by a margin of 230. There were 120 members of her own Conservative party and the Democratic Unionist Party, which holds the balance of power, who voted against her. However these rebels are now going to fall into line to support the government, fearing the alternative of a Marxist-leaning Labour leadership gaining control of Downing St.

Can the UK prime minister salvage her Brexit deal after such a massive loss?

It’s not going to be easy. The EU is showing very little sign of compromise. Domestic opponents of Mrs May come from both sides of the spectrum. Those on the right want a clean break from Europe. Those on the left want a closer partnership post-membership. However this would mean compromises that Mrs May has ruled out.

A protester holds a poster depicting Labour party leader Jeremy Corbyn in London. AP
A protester holds a poster depicting Labour party leader Jeremy Corbyn in London. AP

What is the main sticking point and can it be addressed?

Some opponents of the withdrawal agreement demand the removal of the so-called Irish border backstop. However that has been put in place to ensure that goods and services can flow freely between the two parts of the island. Without it there is a fear that old hatreds will be stirred up and there will be a return to violence. The government in Dublin has played a strong diplomatic hand in securing the backstop and will not want to give it up. A hot mike caught the Irish foreign minister telling a colleague that the government does not want to be seen as the one that reimposed the hard border in Ireland.

Is that the only impediment or does solution lie elsewhere?

Related to the Irish border provisions is the sticking point of a Customs Union between the EU and Britain. This would damage Britain’s ability to strike free trade deals with other non-European economies. Mrs May said on Wednesday that she would not forfeit the commercial opportunities around the rest of the world by tying the UK economy to Europe in an arrangement that replicated many of the established links.

Does it all come down to trade ties?

No. The issue of immigration is just as important. Other influential politicians are urging Mrs May to scrap the current template and position Britain alongside Norway. That is an independent, non-EU nation that has full access to the EU single market. The drawback here is that unlimited flows of immigration between Britain and the EU states would continue post departure. This breaks the pledge that Britain would regain control of its borders by establishing a new skills-based immigration policy.

If all of the above is unacceptable, what happens next?

The default position is that Britain leaves the EU in a sudden break on March 29th. However a growing campaign backed by former prime minister Tony Blair and others is backing a second referendum. The government opposes this saying it would revive the bitter divisions of the 2016 and could lead to ongoing rancour.

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Read more about Brexit:

British pound trades flat after Brexit vote but volatility to linger

Opinion: Brexit chaos exposes UK's diminishing clout on the world stage

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Ten tax points to be aware of in 2026

1. Domestic VAT refund amendments: request your refund within five years

If a business does not apply for the refund on time, they lose their credit.

2. E-invoicing in the UAE

Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption. 

3. More tax audits

Tax authorities are increasingly using data already available across multiple filings to identify audit risks. 

4. More beneficial VAT and excise tax penalty regime

Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.

5. Greater emphasis on statutory audit

There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.

6. Further transfer pricing enforcement

Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes. 

7. Limited time periods for audits

Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion. 

8. Pillar 2 implementation 

Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.

9. Reduced compliance obligations for imported goods and services

Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations. 

10. Substance and CbC reporting focus

Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity. 

Contributed by Thomas Vanhee and Hend Rashwan, Aurifer

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