A further set of ‘No-Deal’ Brexit technical notes

The Government has issued a further 29 preparatory technical notices in the event the UK leaves the EU without a deal, taking the number of notices to 104.

As always, we highly recommend all businesses to seek the appropriate professional and legal advice before making any arrangements. These notes are for information purposes only and more material could be produced by the Government at a later date. Therefore, we urge businesses to remain up to date with any developments.

Camden Town Unlimited (CTU) and Euston Town (ET) have summarised the previous three sets of technical notices, which can be found: here (August 23), here (September 13), and here (September 24).

We are also currently running a survey to find the gaps that exist in assisting businesses to understand Brexit. Please fill out this survey https://www.surveymonkey.co.uk/r/CTUET in order for us to understand the support that you need.

Accounting and Audit

The government wishes to maintain a functioning regulatory framework for companies, guaranteeing that as many of the current laws and rules stay in place. Bearing this in mind, the corporate reporting regime will remain largely unchanged after March 2019.

The laws and rules pertaining to audits will also remain unchanged for UK companies who operate solely within the UK, but companies operating cross-border will see additional requirements. The government has unilaterally provided a transitional period until the end of December 2020 for those individuals in the field of audit to continue to apply for their EU audit qualifications to be recognised in the UK and EU auditor registrations will continue to be recognised in the UK.

We would strongly urge UK businesses that operate cross-border, have subsidiaries in the EU, are listed in EU markets, etc. to seek the appropriate legal and professional advice before adjusting their business model.

Structuring your business

Currently, a large proportion of the guidelines that govern companies are based on EU rules and regulations. This is enshrined in UK law through the Companies Act 2006. If the UK leaves the EU with no-deal after March 2019, the government will ensure a continued regulatory framework for companies in order to guarantee the same laws and rules continue to be enforced. Any gaps in the legislative and regulatory framework will be amended through the powers granted in the EU Withdrawal Act 2018.

Cross-border business operations

The regime applying to a company that is incorporated outside the EU, but operates through branches in the UK, will remain largely the same post March 2019.

There will be changes to UK companies operating through cross-border regimes, as the UK will no longer be an EU member state.

European specific entities

The European Economic Interest Groupings and European Public Limited-Liability Companies (or Societas Europaea) frameworks require that entities are registered within an EU member state and as such will no longer be able to do so after March 2019 in the UK. Those registered in the UK may wish to consider transferring their official address to another EU member state.

We would strongly urge UK businesses that operate cross-border, have subsidiaries in the EU, are listed in EU markets, etc. to seek the appropriate legal and professional advice before adjusting their business model.

Consumer rights

Consumer protection and cross-border enforcement

There will be no immediate changes in consumer rights protection between UK law and EU member states. This is because legislation in this area is already closely aligned. Businesses, which are selling into the EU, should keep up to date with any changes to state laws in EU member countries. If there is a dispute, consumers and businesses will need to seek recompense through EU courts and not UK ones. The government will publish Statutory Instruments together with clear explanations of any necessary changes to the UK legislative framework in this area.

Alternative Dispute Resolution and Online Dispute Resolution

The Alternative Dispute Resolution is a mechanism enabling consumers and businesses to settle their case outside the courts. The government expects businesses to continue to provide this option to consumers who are seeking redress.

The Online Dispute Resolution (ODR) will no longer be available for businesses and consumers after March 2019 as this is a European Commission run scheme. As such, businesses must ensure they remove any mention of the ODR from their online content.

Providing services including those of a qualified professional if there’s no Brexit deal

Recognition of professional qualifications

Currently, the UK and EU have a shared acknowledgment of professional qualifications through the Mutual Recognition of Professional Qualifications (MRPQ) Directive. After March 2019, this directive will no longer be applicable in the UK. As a result there will be no system of reciprocal recognition of professional qualifications between European Economic Area members and the UK.

The UK will create a system to recognise those professionals that are entering the UK from the EU, but this will differ from the current system.

If you are currently an UK national holding an EEA qualification or vice versa and have received a recognition decision in the UK then you do not need to take any further actions.

The government will publish further guidance for businesses and professionals with more details about those whose recognition which is pending or issued after March 2019.

Provisions of Services Regulations

At present, an EU directive makes it simpler for service providers to establish themselves in other member states who provide temporary or permanent services cross-border. The directive is intended as a means to ensure competent authorities like government departments, Devolved Administrations, local authorities, and other licensing and authorisation bodies comply with regulatory principles. Primarily, that competent authorities cannot impose discriminatory, disproportionate or unnecessary requirements on European Economic Area businesses.

After March 2019, EEA service providers will be regulated as third party service providers. This would mean that competent authorities would be able to impose more strict regulations on EEA businesses.

The regulation will be amended to apply to UK nationals established in the UK and UK-established businesses. EEA businesses will no longer have preferential access rights and protections.

Equally, UK companies working in the EEA will be treated as third party businesses. This could result in additional burden to UK businesses as each EEA member might have different rules and regulations when it comes to third country businesses.

Existing free trade agreements

The UK currently has around 40 free trade deals with over 70 countries around the world due to our membership of the European Union. If the UK leaves the EU with no-deal the UK will then not be part of those free trade deals.

The UK Government is working to duplicate many of those free trade deals on a bilateral basis. If a bilateral free trade deal is not accomplished before exit day then trade will be done under WTO terms and the appropriate tariff will be levied.

Businesses should be aware of possible disruption this could cause and follow on going discussions that are pertinent to their sector.

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This is not an exhaustive list as it does not cover the exporting of objects of cultural significance, regulating pesticides, commercial fishing, or breeding animals, which are covered in the preparation papers. It is therefore imperative that businesses seek appropriate legal advice on the developments of these notices where necessary.

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The full list of available papers can be found on this website. We would continue to urge members to review ALL the technical notices that are pertinent to your sector and seek the appropriate legal and professional advice where necessary.