What legal uncertainties will Brexit create?
There will be a whole host of legal uncertainties under Brexit, many affecting businesses. The ones most likely to affect your company include:
- Complications due to EU regulations no longer applying to the UK
- Lack of clarity surrounding grants and subsidies
- Mergers and acquisitions
- Tax issues
- The transfer of data
- Issues regarding brand names and logo designs
"While Brexit presents challenges to those in business, it also raises a number of issues for the agencies that investigate business crime both here and abroad."
"Agreements will have to be reached on how the likes of the Serious Fraud Office, City of London Police and the National Crime Agency will work with their counterparts across Europe after Brexit."
"This century has seen increasing cooperation between law enforcement agencies across the European Union. There is the chance that such cooperation could be lost if Brexit sees a severing of law enforcement ties between the EU and the UK. That could be damaging for the investigation of business crime, which very often crosses borders."Aziz Rahman - Senior Partner at Rahman Ravelli
How will this affect my business?
New UK regulations are likely to replace EU law and will then be applied to future trade agreements. There will be legal uncertainty around these deals, with possible disputes over contractual wording, until at least 2021. These complications are something businesses must be aware of, and must have contingency plans in place for.
Grants and Subsidies
While in the long term it is possible that EU funding will cease altogether. But in the short term all structural and investment fund projects, including agri-environment schemes, signed both before and after the Autumn Statement 2016 and which continue after we have left the EU, will continue to be supported by the UK government.
Anything created under EU Law to encourage and support activities (including innovation in technology, economic development of areas, medical research and renewable energy) will stop being supported by the EU and come under UK government policy.
Companies that have benefited from subsidies, either directly from the EU or from the increase in trade thanks to economic development, need to prepare now for any possible loss.
Mergers and Acquisitions
If you are planning mergers or acquisitions in the next five years, there is the likelihood that access to the single market, EU merger regulations and contractual clauses may all change. Contingency plans need to be put in place and risks assessed to ensure now is the right time to make such a move.
The UK may fail to negotiate a position in regards to EU directives that ensure interest, royalty payments and intra-group dividend have the ability to move within the EU free of any associated withholding taxes. This means that the UK would have to resort to the default position which is stated in the relevant double tax treaty.
There is likely to be a significant emphasis on indirect tax, especially when associated with customs duty and VAT, where the UK would need its own taxation systems.
Direct taxes are imposed by UK law so the majority of the UK’s direct tax will remain unchanged when the UK leaves the EU. However, some UK laws will no longer have to comply with EU laws and so may change.
The Transfer of Data
It will now become more difficult to transfer data between the UK and EU countries thanks to the new General Data Protection Regulation (GDPR). All businesses need to be aware of GDPR, and assess the way they transfer data electronically and online.
You will face hefty fines if you don’t comply with the new rules, they are worth investigating immediately.
Brand Names and Logo Designs
Those who hold the rights to brand names and designs will need to apply for separate UK trade marks as well as EU rights when the UK exits the EU. The current rules and existing rights will change.
What steps should I take now?
If you think that you may be affected by any of these issues, now is the time to seek guidance. All businesses, no matter what their size, need contingency plans in place to ensure they keep risks and disruption to a minimum once the UK leaves the EU.