Be ready for Brexit

Getting a plan in place and engaging with stakeholders is key to a smooth transition, says Gordon Downie

It is crucial businesses prepare for the “day one” changes, putting in place action plans and taking prompt steps, says Gordon Downie

When the UK ceased to be a member state of the European Union at the end of January this year, most businesses would have noticed no real impact. This is because the Withdrawal Agreement provided that EU law would continue to apply in the UK until the conclusion of the “transition period” on 31

December, 2020. In a matter of weeks, this will end and businesses will notice three big legal and regulatory changes.

First, many of the familiar rules that have been built into our legal system over nearly 50 years of EU membership will start operating in new ways or may stop altogether on 1 January, 2021. The new UK Internal Market Act will also replace the familiar EU rules that currently apply to things such as the minimum pricing of alcohol and the regulation of building materials.

Second, businesses bringing goods, services or people into the UK from the EU will have to comply with new UK rules on inbound activity, such as on international trade and immigration. The road haulage industry predicts significant disruption at border control points. In addition, from 1 January EU nationals arriving in the UK, and their employers, will have to meet the requirements of the Home Office’s new points-based immigration system.

Third, UK businesses sending goods, services or people to the EU will face additional restrictions, such as EU data protection rules and any new trade rules. Businesses trading with the EU will need to make sure they are ready to comply with any new customs and VAT requirements. Furthermore, all UK-based data controllers and processors offering goods or services to EU citizens, or tracking their behaviour, will need to appoint an EU representative, principally to communicate with EU supervisory authorities and data subjects.

In 2019, we established a Dublin office to allow the firm’s Irish-qualified lawyers to continue to support clients with their European legal requirements, including European intellectual property (IP) and competition matters. Through this office, we have been supporting businesses by offering an EU representative service, and helping them safeguard their IP by maintaining our ability to represent them in front of EU institutions.

It is crucial businesses prepare for the “day one” changes, putting in place action plans and taking prompt steps to manage the key risks they have identified.

Here are some of the key questions on which we have been advising our clients as they prepare for the end of the transition period:

What are the key legal rules and regulations that apply to my operations and how will they change (if at all) on “day one”?

What day one changes will have the greatest impact on my operations, my supply chain and my customers?

What action do I need to take, and when, to manage those key risks? Are disputes likely to arise, and how will my organisation handle them?

For those key risk areas, how should I deal with ongoing projects or transactions that started before 31 December? The UK/EU Withdrawal Agreement caters for many of these situations, but it is important to check how provisions will apply on a case-by-case basis.

What further changes should I be looking out for beyond day one? Are there proposals that will lead to greater divergence between UK and EU standards, such as in relation to food and agricultural produce, that could affect my business?

The UK government and the devolved administrations are providing guidance in relation to some of these questions, as are trade associations and consumer bodies. The EU Commission has also developed its own suite of readiness guidance. Each business will want to consider carefully how to apply this guidance to its own operations.

A critical ingredient in ensuring successful implementation is effective engagement with stakeholders: customers, suppliers, employees, investors, regulators and others. Defining in advance how such issues might be resolved is a proven route to swift and satisfactory resolution of legal disputes.Finally, it is important to maintain sufficient flexibility to deal with events as they occur, given that the legal and regulatory adjustments are, and will likely remain, in flux and subject to material change.

Gordon Downie is a partner in Shepherd and Wedderburn’s regulation and markets team and a member of the firm’s Brexit Advisers Group. For more information, contact Gordon at [email protected] or at 0131 473 5162.