What are the implications of a no deal Brexit on British businesses?
Depending on who you ask, a No Deal Brexit is either the most financially damaging outcome for UK businesses or a chance to wipe the slate clean and negotiate trade deals that promote the growth of British industries.
Given that the new Prime Minister Boris Johnson has made a point of not taking No Deal off the table and that Theresa May’s withdrawal agreement was voted down three times in parliament, a “cliff-edge” divorce from the EU is now a very real possibility. Whichever side of the argument you subscribe to, it’s difficult to disagree that the prospect of this drastic scenario demands preparation.
The question is, what impact can we expect a no deal Brexit to have on business operations and what measures can such entities take to prepare?
In a no-deal scenario, UK citizens could be restricted in their ability to manage business operations in an EU country due to different legal requirements such as the need to live in the country in which the business operates or the need for additional approvals to operate. Naturally, such restrictions will largely depend on the nature of the business as well as the industry and country it operates in, and leaders would be wise to seek advice ahead of October to put in place the necessary measures to ensure compliance.
Mergers and acquisitions
With No Deal still a very real prospect, the Government has provided guidance to UK companies utilising the EU Cross Border Merger regime, advising that any planned mergers should already be at an advanced stage in order to be wrapped up and completed before the date of October 31st.
In the event of a no-deal Brexit, Settled Status will need to be secured by any EU nationals living and working in Britain who wish to remain in the UK, and any business employing EU natives will need to track the status of such employees to ensure immigration compliance. Last year, we explored the case of Afzal v East London Pizza Ltd (trading as Domino’s Pizza) as a means of highlighting the complicated nature of immigration law and employment law when it comes to Brexit. Any employer uncertain on the rights or status of employees within their business should seek urgent legal advice.
Should the UK leave without a deal, its membership if the single market and customs union will end – in turn, standard WTO tariffs will be due on any goods entering the EU from the UK and vice versa. Businesses which export to the UK would also need to register with customs authorities in order to administer cross-border trade and ensure minimal disruption.
HMRC (Her Majesty’s Revenue and Customs) has released instructions for businesses that trade between the UK and the EU-27 (or with the rest of the world) in preparation for a no-deal Brexit.
They’ve prepared advice for businesses that:
The outcome of a no-deal Brexit may be difficult to prepare for since there is still a great deal of uncertainty with regard to whether an agreement will take shape. However, there are a number of areas that our specialist consultant lawyers can help you review to minimise risk in the future for your business. Get in touch with us to arrange an appointment at your convenience.
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