As a director of a UK company, you have responsibilities under the Companies Act 2006, which include a duty to promote the success of the company and a duty to exercise reasonable care, skill and diligence. As part of these duties, you will need to demonstrate that you and your other directors have considered the impact of Brexit on your business and planned accordingly. You may also be required to provide evidence of your discussions and any action you have taken so far.
As you are not currently a director of a UK business, you are not bound by the responsibilities under the Companies Act 2006; however, should this change, you should take advice to fully understand your duties and liabilities in the new post-Brexit business environment.
Regulated or Licensed Sectors
Your governing body will have further information on exactly how Brexit will impact your sector and the actions you should look to take. It is expected that some services will remain unregulated and some may only need to be given mutual recognition status at a trade-body level. Others will require mutual recognition of professional or trade qualifications, government approval, ‘equivalence’ findings or licences on a country-by-country basis, which may vary in terms of scope and conditions. Some of these can take a long time to be granted and may be withdrawn on little notice without appeal. One way that these could be avoided would be to set up an EU/EEA-based entity with an appropriate local licence, authorisation or qualifications to take advantage of the EU’s free movement of services for all your EU/EEA customers.
Employment and Immigration
As an employer of non-UK nationals, your immigration responsibilities are changing. On 1 January 2021, free movement of EU/EEA citizens will end, and a new points-based immigration system will be implemented in the UK. This may affect your business and employees. If you have plans to employ from the EU, with the exception of Ireland which is part of the Common Travel Area, you will need to be a Home Office-licensed sponsor for which you can apply now. You will also need to consider your current European workforce and seek advice to ensure that they have the correct status to continue working in the UK.
Whilst you do not currently employ non-UK nationals, should you wish to in the future, you will need to understand the changes that have been made to the UK’s immigration system and consider how this will affect your business and employees. You will also need to ensure that your business applies for the correct licences and visas.
Changes to the rules on immigration will mean that UK employees visiting an EU country for business purposes, with the exception of Ireland which is part of the Common Travel Area, will be subject to the specific entry rules of each EU country they are visiting, which may include presenting additional documentation, limiting the length of time UK business visitors can spend in the EU without a visa, as well as having at least six months’ validity left on their passport. Trips to Additional requirements and planning will also be required for EEA employees undertaking business visits to the UK.
After Brexit, should you require employees to travel within the EU, you will need to consider the specific entry rules of each member state that the employee is visiting as well as any additional requirements that the UK implements for EEA business visitors.
The recognition of EU and UK qualifications will be different after Brexit and you will need to check that your employees’ qualifications are valid and meet the required standard with the local regulator in the UK or the EU country in which they intend to work.
The recognition of EU and UK qualifications will be different after 1 January 2021, so should you require employees to have specific qualifications and/or regulatory authority at any point after Brexit, you will need to check that your employees’ qualifications are valid and meet the required standard with the local regulator in the UK or the EU country in which they intend to work.
The UK’s employment regulations will also change once the UK leaves the EU. Any compliance and business policies that are currently in place will need to be reviewed and amended to reflect the new regulatory landscape.
The UK’s employment regulations will also change after Brexit. If your compliance policies, strategies or internal controls need to be updated in the future, you will need to seek advice to ensure that any changes reflect the new regulatory landscape.
To ensure your IP rights remain protected, you may need to apply for separate UK IP right protections. You should also review any open EU IP applications that will be pending after 31 December 2020 to ensure that the correct procedure is followed if any changes are made to the application process and make sure that you obtain the right IP protection.
Currently you don’t have any European intellectual property rights so no action is required following Brexit. If you plan to expand the business into Europe, we strongly recommend you seek legal guidance on how to protect your IP outside of the UK.
If you have registered offices in the EU/EEA, you will be able to continue using your .eu web address. If you do not currently have or plan to have a registered office in the EU/EEA by 1 January 2021, you will have to stop using this domain and use an alternative, such as .co.uk.
Your website address will not be affected by Brexit; however, should you want to use a .eu domain, you will need to comply with the new eligibility criteria.
Starting from 1 January 2021, the UK will be considered a third-party country under GDPR and personal data can no longer be transferred freely from the EEA to the UK, unless the EU regulatory authorities decide that the UK offers essentially the same level of data protection as the EU (otherwise known as the adequacy decision) and/or a deal is struck between the UK and the EU. To continue to comply with EU data protection regulation, changes may need to be made by your UK business if you operate across the EEA or exchange personal data with partners in the EEA. You will not be required to take action to continue to send personal data from the UK to the EEA, but you will need a new transfer mechanism to transfer EU/EEA data to the UK. You may also need to consider appointing an individual as your local representative in an EU member state if you do not have an office in the EEA. Data protection regulation may change if a deal is struck between the UK and the EU; however, you will need to start planning now and decide how you will deal with data protection matters to ensure you have enough time to implement the correct strategies for your business.
If your business has a contract which refers to the EU/EEA, you will need to review your agreements and seek advice to decide whether any variations will need to be made to ensure the original intention still remains and the contract continues to be enforceable.
The UK’s laws and regulations are likely to change after Brexit. If you wish to review your contracts in light of the new regulatory environment, you should consider seeking advice to ensure that any amendments made to the contract maintain the original purpose and it continues to be enforceable.
It is also important to review any agreements that are in place after 31 December 2020 to ensure that the contract is still viable and that the clauses in the contract will not be terminated as a result of Brexit. If the contract is being renewed or extended, the contract should be drafted to include any legislative changes which may arise after Brexit.
If you are planning on renewing or agreeing a new contract after 1 January 2021, you should consider seeking advice to ensure the contract is drafted to include any legislative changes which may apply from this date.
You will need to consider whether Brexit will have an impact on the delivery of your products and services, which could result in a breach of contract. To prepare for any delays, you may need to discuss with other parties in the supply chain whether new arrangements are required, and if waivers of or changes to sanctions are possible.
In order to prepare for any uncertainty which may result in disruption to the delivery of your products or services to the EU, you may need to consider what action can be taken under the clauses in your current contract and decide whether new arrangements with other parties in your supply chain are required.
Cross Border Trade (Import/Export)
From 1 January 2021, the supply or purchase of goods between the UK and the EU will be regarded as imports and exports. You will need to put in place a process to ensure that if EU regulations and standards covering any products you sell into the EU change, you are aware of these changes in time and you are able to adapt your products to meet those new requirements before they come into force. If you provide services to countries within the EU, you will need to ensure that you review and understand the local regulations of any of EU country you trade with and decide whether any additional procedures, approvals, compliance requirements or protections need to be considered. Similarly, you will now need to find a way to keep track of any regulatory changes in the EU that will impact the continued provision of those services. Products and services supplied by EU companies will also be required to meet UK standards and legislation, not just EU standards. It is possible that further documentation will be needed to prove that any such products or services meet UK requirements.
The process for importing or exporting goods or services from the EU will change after Brexit. If you decide to start supplying or purchasing goods or services from companies registered in the EU, you will need to put in place a process to ensure that you follow and understand the relevant EU regulations and standards. You will also need to consider any additional requirements implemented by the UK.
Shipments of goods between the EU and UK will no longer be classified as ‘intra-EU movement’ and the goods may be subject to tariffs and other requirements under EU customs procedures. As a UK business that imports or exports goods, you will need to ensure you have the relevant authorisations and you may be required to make customs declarations. It would be beneficial to train your employees on any new EU customs and export procedures to ensure a smooth transit of your goods.
As you do not currently import or export goods, there is no need to comply with EU customs procedures; however, should this change in the future, you will need to ensure you have the relevant authorisations and you may be required to make customs declarations.
Additional documentation for the import or export of goods between the UK and the EU may also be required once the UK is no longer part of the EU. It would be beneficial to train your employees on any new documentation or processes which are required to ensure a smooth transit of your goods.
Costs and Tax
From 1 January 2021, all businesses will be required to have a GB EORI number to move goods into or out of the UK. As a VAT registered company that trades with the EU, you should have an existing EORI number, but it is important to check that it begins “GB”. If not, you will need to apply to HMRC for a new EORI number before 31 December 2020. You should also consider applying for Transitional Simplified Procedures to make importing goods from the EU easier.
As you are non-VAT registered company that trades with the EU, you will need to register for a GB EORI number to continue moving goods between the UK and the EU before 31 December 2020. You will also be required to report and pay import VAT through the customs processes.
After Brexit, there may be significant changes in UK domestic law which may impact UK VAT and other tariffs. The UK will start to apply a UK-specific tariff to all imported goods called the UK Global Tariff, unless an exception applies. This will replace the EU Common External Tariff for imported goods, but this tariff may still apply for goods exported from the UK to the EU. Import VAT will also continue to apply on goods imported from the EU to the UK. There will be limited changes to VAT on services provided to the EU after the end of the transition period as the reverse charge will still apply.
Whilst you do not currently supply or purchase goods or services to the EU/EEA which are subject to VAT and other tariffs, there may be significant changes in UK domestic law which may impact UK VAT and other tariffs after Brexit. You should monitor any amendments and seek advice to confirm if these will impact your business.
There may be also increased volatility in GBP exchange rates after Brexit. You should review any existing contracts or future agreements and consider what impact an increase in costs, as a result of currency fluctuations, would have on your business.
Tax, customs and excise duties may change in the UK and will no longer rely on EU directives after the end of the transition period. The level of change will depend on Brexit negotiations and you should seek advice to clarify your business tax position to reflect the new regulatory landscape.
Currently your company’s tax planning strategies do not rely on EU Directives, the UK's tax, customs and excise duties may change after the end of the transition period. You should seek advice to confirm whether any new UK legislation in this area may change your business tax position.
Insurance policies can be affected by sudden changes to the economic market and business environment. You should review your insurance arrangements and ensure that you have the cover you require after Brexit.