What Does Gov.uk Say You Need To Do Now To Prepare for Brexit?

Wow, I just plugged the data about my own professional service business into the UK Government's "Get Ready for Brexit Check" and set out below is what I got... 

As you read it, remember that free trade deals do not cover the export/import of services to anywhere near the extent that the UK trades in services under the principle of free movement of services as an EU member state. So, any form of Brexit effectively means "No Deal" for services.

All I can say is that I'm very relieved that I did my Brexit-proofing last year!

...

Based on your answers, we know:

• You own or operate a business or organisation
• You work in professional, legal and business services
• Your business sells goods or services in the UK
• Your business provides services in the EU
• You do not employ EU citizens
• You exchange personal data with EU organisations
• You process personal data from the EU
• You use websites or services hosted in the EU
• You provide digital services to the EU
• You use or rely on intellectual property protection
• You use or rely on IP copyright protection
• You do not receive EU or UK government funding
• You do not sell products or services to the public sector
• You are a British national
• You live in the UK
• You are employed in the UK
• You plan to travel to Ireland

Your business or organisation

Check if you need to change your conformity assessment or conformity marking to sell your CE marked goods in the UK or EU

In most cases you can continue using the CE marking in the EU and UK (although in some cases you may need to transfer your certificate of conformity to an EU conformity asssesment body) - but if your good requires UKCA marking and you have not used it, then it will not be valid for sale in the UK.

Read the guidance: Prepare to use the UKCA mark after Brexit

Do it as soon as possible

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Get legal advice if your business is merging with an EU company

If you do not follow the rules, you may be investigated by the Competition and Markets Authority (CMA) and the European Commission.

Read the guidance: Merger review and anti-competitive activity after Brexit

Do it as soon as possible

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Check if you need to appoint a representative in the EU, and label your goods with your EU importer's details

If you do not meet the requirements, you may not be able to export goods to the EU.

Read the guidance: Placing manufactured goods on the EU market after Brexit

Do it as soon as possible

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Check if your employees need a visa or work permit and meet any requirements for their profession to work in the country they’re going to

You or your employees may not be able to enter or work in some countries.

Read the guidance: Providing services to any country in the EU, Iceland, Liechtenstein, Norway or Switzerland after Brexit

Do it as soon as possible

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Check if you need to change how you do accounting and reporting

You may breach reporting requirements in EEA countries if you do not make any changes you need to.

Read the guidance: Accounting if there's a no-deal Brexit

Do it as soon as possible

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Read the guidance from the Information Commissioner's Office (ICO) to check if you need to change your contract to keep accessing personal data from the EU

You will not be able to access personal data from the EU without the right contract.

Read the guidance: Using personal data in your business or organisation if there’s no Brexit deal

Do it as soon as possible

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Check how to label food if you're selling it in the UK or EU

You may not be able to sell goods in the EU if they're labelled incorrectly.

Read the guidance: Food labelling changes if there's a no-deal Brexit

Do it as soon as possible

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Check if you need to pay a tariff on goods you import from the EU

Your goods will be held at customs if you do not pay the correct tariff.

Read the guidance: Check temporary rates of customs duty (tariffs) on imports after a no-deal Brexit.

It takes more than 4 weeks

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Sign up to search for contracts to sell goods or services to the UK public sector

You won't receive notifications of new UK public sector contract opportunities.

Read the guidance: Public-sector procurement after a no-deal Brexit

Do it as soon as possible

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Check if you need to change your contracts to broadcast licenced content outside the UK

You may not be able to broadcast outside the UK if you do not get extra copyright permissions.

Read the guidance: Copyright if there's no Brexit deal

Do it as soon as possible

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Check if you need permission to sell someone's intellectual property in the EEA, if you've already sold it in the UK

You may not be able to export your intellectual property protected products from the UK to the EEA without the right permission.

Read the guidance: Brexit and exhaustion of intellectual property rights

Do it as soon as possible

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Appoint a representative in the EU if you run a large UK-based online business providing digital services in the EU

You may be fined if you do not have a representative to help you meet online security standards.

Read the guidance: NIS Regulations - what digital service providers in the UK should do if there’s no Brexit deal

Do it as soon as possible

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Exchange your UK Driver Certificate of Professional Competence (CPC) for an EU Driver CPC

You will not be able to drive a lorry, bus or coach for an EU operator if you do not have an EU Driver CPC.

Read the guidance: Driving in the EU after Brexit

Do it as soon as possible

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Check how to get approval to sell vehicles and vehicle parts in the UK and the EU

You will not be able to sell vehicles or vehicle parts in the UK and the EU if they are not approved correctly.

Read the guidance: Vehicle type-approval if there’s no Brexit deal

It takes more than 4 weeks

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Check what steps you need to take in order to import goods from the EU

If you do not get your business ready, you may not be able to import goods into the UK from EU countries.

Read the guidance: Get your business ready to import from the EU to the UK after Brexit

Do it as soon as possible

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Disclose your designs before 31 October if you want unregistered protection in the UK and EU

If you do not do this before 31 October, you’ll only have protection where you first showed your design, either the UK or the EU.

Read the guidance: Changes to registered design, design rights and international design and trade mark law if the UK leaves the EU without a deal

Do it as soon as possible

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Check what you need to do if you're a lawyer with an EU or EEA qualification to still work or provide legal services in the UK

You may not be able to continue working or providing legal services in the UK if you do not prepare.

Read the guidance: EU lawyers in the UK after a no-deal Brexit

Do it as soon as possible

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Check what you need to do if you own a UK legal services business

You may not be able to continue providing legal services in the same way if you do not get your business ready.

Read the guidance: Legal services business owners after a no-deal Brexit

Do it as soon as possible

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Check what you need to do if you're a lawyer with a UK qualification to still work or provide legal services in the EU

You may not be able to continue working or providing legal services in the EU if you do not prepare.

Read the guidance: UK lawyers practising in the EU, Norway, Iceland or Liechtenstein in a no-deal Brexit

Do it as soon as possible

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Check which carbon pricing policies you need to comply with before and after exit day

You may not comply correctly with emissions reporting and carbon pricing regulations, which could lead to a fine.

Read the guidance: Meeting climate change requirements if there’s no Brexit deal

Up to one week

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Check if your employees need to make social security contributions in the UK as well as in the EU, EEA or Switzerland

Your employees may not be entitled to healthcare or benefits in the country they work in.

Read the guidance: Social security contributions for EU, EEA or Swiss workers

Do it as soon as possible

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You may not need to do all these actions ahead of the 31 October deadline. The action you may need to take may change subject to negotiations and your own circumstances.

Any Form Of Brexit Means #NoDeal For Export Of British Services

An excellent event at the Institute of Directors today on the impact of Brexit on Britain's trade in services - congratulations to all the speakers. This is vital to understand and address in some detail, because services amount to 80% of the UK economy, 80% of UK jobs, a third of UK exports of which 40% go to other EU countries based on the principle of free movement of services. Yet most services are not covered by free trade deals with third countries. So even if Britain were to leave the EU and eventually negotiate trade deals, that wouldn't help UK exporters of services. There will always be "No Deal" for most services, so the UK's "No Deal" warnings are permanent for services. This is why Liz Truss is suddenly making "liberalising trade in digital and services" one of three priorities at the WTO. She's too late, and it will never happen for the reasons given below, so it's time to get cracking on mitigation...

While the problem for services post-Brexit isn't news to me, I'm still absolutely stunned to see so little information about it in the media. Partly it's the age-old assumption that 'business' means 'big business' while nearly all UK businesses are small - 99% of UK businesses (5.7m) employ fewer than 250 people. Only 8,000 UK businesses employ more than 250 people.  

5.4m UK businesses are 'micro-enterprises' who are either sole traders or employ up to 9 people.

'Businesses' are people - many of them sole traders selling their time and expertise across the EU. Eve online, business is personal.

I've posted on the impact of Brexit on services many times, here and on Pragmatist and for several law firms. I've tended to focus on the Brexit impact on financial services because that's my main area of expertise - and they are the largest of the UK's services exports, relying on valuable EU passporting rights which they will lose. As a result, 7000 jobs have moved so far, with more to follow if Brexit proceeds, and the costs of splitting capital/liquidity to support separate EU subsidiaries will cost customers €60bn a year by 2030.

But I've also mentioned the need for a new basis for transferring personal data from the EU27 to the UK, and I've even shared my own personal Brexit-proofing journey in adding Irish qualifications and consulting to an Irish law firm, for the same reason that it makes sense to switch EU contracts from English law to Irish law.

So I was thrilled to learn of today's event and I was not disappointed. I'm sharing my notes (anonymised) and I understand the video will be available via the IoD site. Worth watching! 

What laws govern the export of services?

Every country regulates what services can be offered to its residents to some degree. Regulations get tougher the more money residents might lose, or the greater the gap in knowledge between the service provider and the customer - that's why financial services are so heavily regulated.

Permitting foreign service providers to sell their goods or services in your country is a matter of trust and control, or political will and legislation ("trust is good but control is better").

Trade law on goods developed first, and rules on services followed - in particular:

1. EU membership entitles firms to free movement of services based on mutual recognition of professional/trade qualifications and legislation that ensures individual member states don't drop their standards or supervision. That freedom falls away on Brexit day (subject to any agreed transition).
2. Some services remain unregulated today (e.g. management consultants) and some are given mutual recognition status only at trade body level rather than by governments (e.g. architects). That shouldn't change on Brexit.
3. Some regulation is based on outcomes, rather than dictating how qualifications are actually obtained or what subjects have to be studied to gain 'equivalence' or 'mutual recognition' (e.g. lawyers). This could diverge on Brexit, and 'equivalence' findings and mutual recognition will not automatically apply, can take a long time to be granted and are subject to withdrawal on little notice without appeal.
4. Financial services passporting represents the most advanced form of free movement in services, since authorisation in one EU member state allows certain services to be provided in all member states. That will not be possible after Brexit (subject to any transition).
5. In stark contrast to financial services passporting, the 'equivalence' regime that is available to third countries (and post-Brexit UK) is only available for certain types of financial infrastructure (e.g. exchanges) and some investment services, and can be withdrawn without appeal on 30 days notice (e.g. Swiss stock exchange) - so equivalence is not reliable.
6. Other services that can be supplied to EU countries after Brexit will be based on a patchwork of national access rights, which vary in terms of scope and conditions.
7. Outside the scope of EU trade rules (and where only minimum standards are set), the member states (like any other country in the world) can set tougher standards where they see greater potential adverse impact. The UK will be treated like any other non-EU country for that purpose. The UK government has tried to helpfully list where different EU countries have different rules for different services (will that stay up to date?). 
8. There is a WTO rule (article 7 of GATS) aimed at preventing one member country from discriminating against another member ('most favoured nations' or 'MFN').  Free trade agreements also contain MFN clauses that require one party to offer the other any similar benefit that has been offered to another country. The EU seems to ignore the WTO requirement (which the Swiss have complained about to no effect so far), but does allow MFN clauses in its free trade deals with very limited scope (won't cover mutual recognition or equivalence decisions, for example, just legislation and 'national treatment'). Critically, the EU insists on its own regulatory autonomy. Only the  European Commission (and ultimately the European Court of Justice) can decide whether a service etc meets EU rules. 

Immigration and visa restrictions go hand-in-hand with constraints on services, since people often have to be physically present to provide services.  So free movement of labour is also critical to the free movement of services. That freedom entitles Brits to live, work and retire freely in 30 countries, but is lost on Brexit. Related entitlements to healthcare and so on will also fall away...

What are the practical impacts of Brexit?

Well, if you're among the 5.4m 'micro-enterprises' and export goods or services to the EU, the VAT rules will be a big problem. You currently benefit from hard-fought exceptions under the VAT Mini One Stop Shop (MOSS), but those will disappear on Brexit day (what if part way through contracts?). The HMRC warning states:

Businesses that want to continue to use the MOSS system will need to register for the VAT MOSS non-Union scheme in an EU member state. This can only be done after the date the UK leaves the EU. The non-Union MOSS scheme requires businesses to register by the 10th day of the month following a sale. Alternatively, a business can register in each EU member state where sales are made.

EU consumers are already ceasing to buy from UK suppliers, and EU suppliers are geo-blocking UK customers and suppliers from applying to their sites. So forget bidding for service contracts from the UK, and many EU business people have stopped traveling to do business in the UK.

Work permits will be needed after Brexit, but can’t be applied for before then. These may be needed for speaking at conferences (unless asked a question first), giving training sessions, working on projects and so on.

Booze cruise etc to the EU for cheaper, duty free consumer goods may impact small retailers and their service providers.

If you're a director of a company, you have a duty to promote the success of the company, as well as a duty to exercise reasonable care, skill and diligence. You need to be able to demonstrate that in the context of Brexit - which is a known unknown. That would likely include: board discussions, a sub-committee, minutes, briefing papers, presentations, risk registers, scenario planning, supply chain analysis to identify suppliers at risk who may need to be replaced/helped (using the wrong type of pallet, say, or their trucks may be allowed into the UK by UK authorities, but will struggle to back into EU); and resolutions taking action to address threats and opportunities.

What can you do if your services are impacted? It depends on threats and opportunities identified, but some examples:

• Set up a new subsidiary in an EU27 member state;
• Rewrite contracts with new governing law and other pertinent changes;
• Establish a new basis for transferring personal data from EU customers/suppliers to the UK;
• Consider the tax impact of moving business activity to an EU27 country (or, for instance, whether withholding tax exemptions still work for entities owned by UK companies)

Time to get cracking!

The Cost Of My Professional #Brexit Preparations - £9,000 in Year 1

Few politicians will talk about the plight of the UK's trade in services after Brexit, presumably because they don't understand how it works, much less care. Yet services represent 80% of the UK economy, while UK firms and individuals exported £245 billion in services in 2016. But the UK had an overall trade deficit of -£67 billion with the EU in 2017, because a surplus of £28 billion on trade in services (exporting more than we imported) was outweighed by a deficit of £95 billion on trade in goods. The affected service providers will be hoping for this insane project to stop, but in the meantime we must prepare for the worst, whatever that might be...

Services affected by Brexit include, say, a British architect designing a building for a German client; the Manchester hotel catering for Italian tourists; or the Edinburgh accountants advising a French exporter.

Financial services and other business services (legal, accounting, advertising, research and development, architectural, engineering and other professional and technical services) made up 52% of UK service exports to the EU. And, of course, many businesses in those categories supply services to each other. 

So, the fact that financial licences won't work across the EU after Brexit, for example, means UK finance firms are moving their EU-facing operations into a remaining EU27 country and serving the rest of Europe from those offices.

Similarly, the fact that my UK legal qualifications won't be recognised in the EU means that I'll need to set up an additional presence somewhere in the EU27 (Ireland, in my case) just to keep advising my financial services clients on their EU-facing operations.

So, for me personally, the cost of doing business as usual after Brexit is at least £9,000 in fees the first year, and £6,000 each year after that, excluding any travel and accommodation. That's a big investment to make on the assumption that local lawyers elsewhere in the EU27 don't simply take my EU-related work away from me. But it's also money that will be spent in Euros in Ireland and not in the UK. Ireland is the winner here.

But this is not just a sob story about financial institutions and their professional advisers. The British woman, based in France, who drives skiers from Geneva airport to Morzine in her UK minibus on her UK bus licence won't be able to do that anymore, either.  Courier firms are also horrified, not just about vehicle or driver licensing issues and the higher costs and complexity involved in the movement of goods, but also because they employ EU staff with language skills and other key knowledge who may simply want to leave. 

What hoteliers make of all this is anyone's guess, it seems, but PWC suggests the biggest problem will be the ability to recruit and retain staff with the right language skills and experience. Based on the impact on financial and other business services, perhaps the movement of EU-facing operations into the EU may also mean less need for UK management and staff to travel to EU offices.

Of course, a market should develop around the need for advice on how to prepare for the worst. But for that to happen, we need to be much clearer on the impact of Brexit on services in the first place.