Brexit for businesses

On 31 January 2020, the UK officially left the European Union (EU). On 24 December 2020, the Trade and Cooperation Agreement (TCA) was struck between the UK and EU, resolving a number of key issues. 

On 1 January 2021 the ‘transition period’, during which many EU laws still applied, ended. The European Union (Withdrawal Agreement) Act 2020 ensured that most EU law in force in the UK on this day was retained in domestic UK law (known as ‘retained EU law’). Despite the large body of retained EU law, Brexit and the TCA have led to multiple important developments that businesses should be aware of.

Read this guide to understand some of those changes and how best to help your business navigate Brexit.

Free trade of goods

Under the TCA, most goods can be traded between the UK and EU without being subject to tariffs (ie import taxes) or quotas (ie quantity restrictions). 

Crucially, this free movement of goods only applies to products that originate from the UK or EU. To originate in the EU or UK, the products must be ‘wholly obtained’ from the UK or EU or ‘substantially transformed’ in the UK or EU in a way that adds value to them. Goods that are made in countries outside of the UK and EU but which pass through the EU to the UK (or vice versa) may, therefore, be subject to tariffs and quotas. For more information on this requirement, see the Government’s website. 

What is the new border plan?

The UK Government has increased customs procedures and inspections on goods entering and leaving the UK. If a business transports goods across the UK-EU border by road, they should be aware of some of the key requirements put in place since the end of the transition period. This includes: 

• ensuring that they have the correct documentation, licences and other requirements in place to cross the border

  • Haulier advice sites can help you check the paperwork that you need to cross the border, although they will close on 13 May 2022 

• drivers must have a valid: 

  • passport 

  • UK driving licence

  • Driver Certificate of Professional Competence 

  • international driving permit (IDP) if needed for the country of travel, and 

  • any necessary healthcare documents

• businesses should check what customs declarations they need to make in order to transport their goods

• businesses should obtain the necessary EORI number, which starts with ‘GB’). This is an identification number required for transporting goods into the EU

Are there new customs requirements?

Customs requirements for goods entering the UK from the EU have gradually increased. Customs declarations are now generally required for goods being imported into the UK from the EU or exported from the UK to the EU. 

There are, however, some checks yet to come into effect. The Government has suggested that some Brexit-related border controls may not come into effect until 2023, such as the requirement for physical checks on fresh food entering the UK from the EU. 

The Government provides guidance to help businesses check whether they need to declare goods they’re exporting or importing. In addition, the import or export of certain kinds of goods may require specific licences or certificates. Businesses moving goods to, from or through Northern Ireland and/or Ireland should consider the alternate customs requirements for these situations.

As a start, businesses importing goods across the border should:

• check what import licences or certificates they need

• check the marking, labelling and marketing standards for food, plant seeds and manufactured goods

• check the rules for importing alcohol, tobacco and certain oils

Businesses exporting goods across the border should:

• check what export licences or certificates they need

• check the marking, labelling and marketing standards for food, plant seeds and manufactured goods

• check the rules for exporting alcohol, tobacco and certain oils

Further changes to customs requirements are expected on 1 July 2022, including: 

• full safety and security declarations for imports

• export Health Certificates

Do I need to pay VAT when moving goods between the UK and the EU?

Value-added tax (VAT) is a tax levied on goods and services that are consumed in the UK and EU. VAT is only levied on goods and services consumed in the UK, meaning most goods being exported to the EU should not be subject to VAT. 

Any goods and services being imported from the EU into the UK may require payment of customs duties and VAT. Businesses should check the rate of customs duty on imports and check the rate of VAT.

Certain goods require a conformity mark to prove that they comply with the UK’s accepted standards for certain types of regulated products. These standards are primarily used to ensure that products are safe for consumers to use. Products subject to these requirements cover broad categories such as toys, ecodesign, and medical devices. Some categories (eg medical devices) are subject to extra rules. 

The EU uses the CE marking system. The CE mark indicates that goods comply with EU standards on health, safety and environmental protection. 

What is the new UK conformity mark?

Following Brexit, the UK has adopted the new UK Conformity Assessed (UKCA) system for imports into (and products already within) the UK.

Similar to the CE marking system, by attaching the UKCA marking to their products, businesses are taking on full responsibility for their products’ conformity with the relevant legislative requirements. Depending on the rules applicable to each product category, UKCA marking may be able to be carried out by self-declaration or third-party conformity assessment may be mandatory.

Businesses must comply with the following rules when using the UKCA marking:

• the UKCA marking should be clearly visible and attached to the product itself or, if this isn’t possible, applied to the packaging or associated manuals

• the marking must only be placed on a product by the manufacturers or, when the relevant legislation allows, their authorised representatives

• businesses should not put any markings or signs on their products that may cause third parties to misconstrue the meaning of the UKCA mark

• the UKCA marking cannot be placed on products unless specifically required by UK legislation

When will the new UKCA marking be required? 

The UKCA system is currently in use. However, in 2023 the Government decided to retain the CE marking indefinitely for use within the UK for many products. However, certain products (eg those adhering to the ecodesign rules or medical devices) must still use the UKCA marking eventually and not the CE marking. The transition dates depend on the type of product in question. For more information, read the government’s guidance on using the UKCA marking.

Note that UK businesses importing goods into the EU still need to use the CE marking system.

Additional requirements for importers 

If a business transports goods from outside the UK (eg from the EU) into the UK and it is the first business to sell these goods on the UK market, it will be classified as an ‘importer.’ Importers are subject to additional requirements related to product conformity, including:

• goods must be labelled with the business’s details

• they must ensure that the products’ manufacturer has drawn up the correct technical documentation and has complied with their labelling requirements

• a copy of the declaration of conformity must be kept for 10 years

For more information on UKCA marking, read the Government’s guidance. You can also Ask a lawyer for help, as complying with conformity and marking requirements can be complicated. 

Note that UKCA is not recognised in Northern Ireland. Read the Government’s guidance for more information on equivalent marking regimes for Northern Ireland.

Services can be supplied across borders in a variety of forms. These include:

• online services, eg those provided through a website

• in-person services, when a supplier travels to the client’s location to provide their service

• services provided through a subsidiary company in another jurisdiction

The movement of services across borders is subject to less rigid border controls and tariffs than the movement of goods. However, other jurisdictions’ regulations can pose major obstacles to the provision of services across borders. For example, different countries may have different business regulations, immigration laws, and qualification and standard requirements for providers of certain services (eg for accountants or lawyers). Before Brexit, the movement of services between the UK and the EU largely avoided these obstacles by making use of an integrated services market. The EU sets regulatory standards for service provision across all member states and EU law prevents member states from imposing requirements that unjustifiably discourage the provision of services across borders within the internal market. 

How does Brexit affect the services sector?

The UK is no longer part of the EU’s integrated services market, so UK regulations can diverge from the EU standards. This contributes to increasing obstacles to the provision of cross border services. The potential obstacles include:

• restrictions on international transfers of data 

• lack of mutual recognition of professional qualifications

• lack of mutual recognition of intellectual property between the UK and EU

• immigration laws preventing service providers from crossing borders for business purposes

• restrictions on the incorporation/expansion of businesses and subsidiaries in the EU

Services provided by UK businesses now need to adhere to the requirements of each EU member state individually when providing services in that state. For more information, read the Government’s guidance. If your business provides services to the EU, you may want to draw up a Business continuity plan to set out your recovery procedure in the event of Brexit-related disruption.  

How does Brexit affect e-Commerce?

On 1 January 2021, the Electronic Commerce (e-Commerce) Directive 2000 ceased to apply in the UK. This Directive relates to online activities in EEA (European Economic Area)  countries. It allows EEA online service providers to operate in any EEA country whilst only following relevant rules in the EEA country in which they are established. Following the Brexit transition, UK businesses must make sure to follow the relevant rules (eg those previously covered by the Directive) in all countries in which they provide services. 

To find out more, read the Government’s guidance and E-commerce between businesses.

You should also note that the associated Online Dispute Resolution process no longer applies in the UK where you have made purchases (or goods or services) from traders based outside of the UK. Instead, you can get assistance from the Consumer Centre UK. While the Centre is not an enforcement body, it provides advice to consumers to enable them to enforce their consumer rights.

The impact of Brexit on IP rights for EU and UK based businesses varies according to the type of intellectual property right. The UK government has recommended that businesses carry out an IP audit to determine their dependence on IP protection in the UK and the associated risks of losing such protections.

The Withdrawal Agreement sets out the various changes for each IP right, which include:

Trade marks 

The UK remained part of the EU trade mark system throughout the transition period, ending on 31 December 2020. During this period, EU-registered trade marks continued to benefit from trade mark protection in the UK.  

Since 1 January 2021, new EU-registered trade marks are protected in the EU, but not in the UK. However, all pre-existing EU trade marks continue to be protected in the UK through the registration of a ‘comparable’ trade mark at the Intellectual Property Office (IPO). This process was automatic, and current EU-registered trade marks were automatically copied across into UK-registered trade marks. Anyone with an ongoing application for an EU trade mark at the end of the transition period had until 30 September 2021 to apply for a UK trade mark. For more information on ‘comparable’ trade marks, read How to register a trade mark.

Any new trade marks registered in the EU after the transition period will only be protected within the remaining EU member states. To gain protection in the UK, you must register your trade mark in the UK.

The departure from the EU has no impact on the protection and validity of UK-registered trade marks within the UK.

For more information on trade mark protection in the EU after Brexit, please visit the Government website. 

Registered designs 

The UK remained part of the EU registered Community design system during the transition period. Any designs already registered in the EU on 1 January 2021, were automatically copied onto the UK register. Any pending EU applications, which were ongoing by the end of the transition period, had until 30 September 2021 to apply in the UK for the same protections. 

Any new designs registered with the EU community design system after 2020, will only be protected within the remaining EU member states. To register your designs for UK protection, you must register those designs on the UK register. You can Ask a lawyer if you are concerned about the protection of your registered designs. 

For more information on ‘comparable’ design rights, read Design rights.

For more information on registered design rights after Brexit, please visit the Government website.

Unregistered designs

The UK also remained part of the EU unregistered community design (UCD) system during the transition period. Any 2D and 3D designs that were disclosed in the UK or EU were automatically protected in both territories as unregistered community designs until 31 December 2020. 

After the transition period ended, designs disclosed in the UK have been protected under unregistered design right in the UK jurisdiction alone. The EU doesn’t provide any reciprocal protection to UK designs. If a UK citizen or business discloses a design in the EU, it will not be granted protection as an unregistered design right in either the UK or EU and this disclosure may also impact the novelty of their design, should they later seek to protect the right in the UK. 

To offer protection for UCDs, the UK created a UK ‘supplementary unregistered design’ (SUD). If a design was made public before 1 January 2021, it will remain protected in the EU until the end of 3 years. For more information, read Design rights.

Patents

Brexit will have no impact on the UK’s membership of the European Patent Organisation (EPO), as it is not an EU agency. Therefore, the patent registration and enforcement process will remain unchanged and patents created in the UK will continue to benefit from protection across all members of the EPO. 

Copyright 

Brexit will have no impact on how most copyright protection works between the UK and the EU, as this is governed by separate international treaties. For more information on copyright protection after Brexit, please visit the Government website. 

This is a complex area of law so if you have any questions regarding the impact of Brexit on your intellectual property you should Ask a lawyer.

Trade marks and registered design rights - address for services

Applicants for new UK trade marks and registered designs will require a UK, Gibraltar or the Channel Islands address before their application will be considered by the IPO.

Owners of  ‘comparable’ trade marks or design rights are not required to provide such a UK address for a period of 3 years from 1 January 2021. From 1 January 2024, the IPO will require a UK, Gibraltar or Channel Islands address for service where new contentious proceedings are brought. For more information, visit the Government’s website.

On 1 January 2021, the UK became a ‘third country’ (a country outside of the EU), for the purpose of personal data transfer outside the EU.

On 28 June 2021, the European Commission (EC) adopted an ‘adequacy decision’ in relation to the transfers of personal data from the EU and EEA to the UK This means that personal data transfers from the EU and EEA to the UK can be made without the need to put in place additional contractual paperwork, measures or assessments. The adequacy will be reviewed every 4 years (provided the UK continues to ensure an adequate level of data protection) and the EC will intervene if necessary.

Businesses should ensure they are clear about transfers of personal data in their Privacy policies.

Note that international transfers of personal data outside the UK are prohibited unless certain safeguards are in place (eg an adequacy decision or standard contractual clauses). Therefore, as a business, you must properly handle the personal information given to you by individuals.

For more information on international data transfers, read International transfers of personal data.

What will happen to the General Data Protection Regulation (GDPR)?

The GDPR has been retained in UK law (as the UK GDPR) and will continue to be read alongside the DPA, with some minor amendments to ensure it can function in UK law. 

On 28 June 2021, the EC adopted an ‘adequacy decision’ on the standard of safety that UK data protection laws provide. This adequacy decision is set to be reviewed every 4 years. As the EU has deemed UK data protection standards to be adequate, no further safeguards are required to transfer personal data between the EU and UK.

Do I need an EU-based representative?

UK data controllers and processors may need to appoint EU-based representatives from 1 January 2021. This will be required where a business:

• has no offices, branches or other establishments in the EEA, and

• offers goods or services to individuals in the EEA or monitors the behaviour of individuals in the EEA

Where an EU representative is needed, you must authorise them, in writing, to: 

• act on your behalf regarding your GDPR compliance

• deal with any supervisory authorities or data subjects (ie the individuals the personal data relates to)

For more information, read EU representatives.

Who is my supervisory authority?

Supervisory authorities are the relevant public bodies that regulate the flow of data within their jurisdiction, for example, the Information Commissioner's Office (ICO) regulates data protection in the UK. It is important that UK businesses identify who their lead supervisory authority is, as these organisations set the rules on data protection within each jurisdiction, and can impose fines or penalties on businesses for breaching those rules. 

Since the end of the transition period, UK businesses no longer benefit from the EU ‘one stop shop’ principle. This previously allowed a business to have just one lead supervisory authority across the whole EEA even when processing data in multiple jurisdictions. 

From 2021 onwards, UK businesses are subject to the supervisory authorities of the ICO and the domestic supervisory authority of EU member states that they process data within. The supervisory authorities that you must comply with vary depending on whether you have an office, branch or establishment in the EEA:

• where a UK business processes data within multiple EU member states, and has an office, branch or establishment in the EEA (as well as the UK) they will be subject to the supervisory authority of the ICO and only one member state’s authority - typically the state with the largest customer base.

• where a UK business processes data within multiple EEA member states, but does not have any offices, branches or establishments in the EEA, they will be subject to the ICO and the supervisory authority of each member state they process data from, meaning they may be liable for penalties from multiple supervisory authorities.

Competition law (or ‘Antitrust’) refers to the body of law which prevents businesses and states from acting in ways that distort competition in a market (ie by giving one or more businesses a competitive advantage against others by prohibited means). 

Changes to UK competition law

The key prohibitions in EU competition law are contained in Articles 101 and 102 of the Treaty on the Functioning of the European Union (TFEU). Namely: 

• Businesses in a ‘dominant position’ (ie they have significant market power in a market they are acting within) are prohibited from engaging in activity which is ‘anti-competitive’ and which affects competition (eg by setting unfair selling or purchasing prices which push competitors out of a market and affect consumers)

• Businesses are prohibited from forming agreements with other businesses which may affect competition and disadvantage consumers (eg by agreeing to fix prices for their products so that consumers must pay more for them)

These provisions already had equivalent provisions in UK competition law (in Chapters I and II of the Competition Act 1998) before Brexit. Therefore, these principles are still enforced. Moreover, at the end of the transition period on 1 January 2021, most EU competition law was incorporated into UK law as ‘retained EU law’. This means that the wider body of EU law (eg case law and related Regulations) that affects how these key prohibitions are applied in the UK are still part of UK law. 

However, since the end of the transition period, UK competition law has begun to diverge from EU competition law. For example, the Vertical Agreements Block Exemption Order came into effect on 1 June 2022. It brings bring a new approach to agreements between businesses at different levels of a supply chain (ie vertical agreements), replacing and diverging from the retained (from EU law) Vertical Agreements Block Exemption Regulation. For more information on the significance of exemptions for vertical agreements, read Competition law and distribution agreements.  

Competition law enforcement

Before Brexit, competition law in the UK was created and altered by both the UK Government and EU institutions. It was enforced by both the UK’s Competition and Markets Authority (the CMA) and the European Commission. Since the end of the transition period on 1 January 2021, the CMA has been solely responsible for investigating and taking enforcement action against potential breaches of competition law in the UK. However, any conduct that also affects the EU’s single market may also be investigated by the Commission (a ‘parallel’ investigation), and the Commission and the CMA can collaborate in their investigations.  

Ongoing investigations

If a Commission investigation into anti-competitive behaviour began before the end of the transition period, the Commission has been able to continue that ongoing investigation. 

State aid

State aid is a branch of competition law which aims to keep market competition fair by imposing rules against state (ie Governmental) subsidies which give some businesses a competitive advantage over others. In the EU’s internal market this law is largely aimed at preventing member states’ governments from giving their businesses an advantage over other member states’ businesses within the EU-wide internal market.

Following Brexit, the UK is no longer a part of the internal market and is no longer subject to EU state aid laws. However, in the TCA, the UK and EU agreed to pursue similar standards of support for domestic businesses in pursuit of a level playing field. This means that the UK government should not promote UK businesses unfairly and unreasonably above EU businesses. If the level playing field continues to be maintained, it is likely to continue facilitating fewer border checks and tariffs than UK businesses would otherwise face when operating in the EU.

The majority of employment law in the UK comes from regulations set out by the EU. As a member of the EU, the rights and responsibilities of employees and employers were largely consistent across all EU countries, facilitating the employment of individuals in other EU countries. Since the end of the Brexit transition period, UK employment law has started diverging from EU employment law.

Employing EU nationals in the UK

Nationals of EU and EEA countries or Switzerland residing in the UK with settled or pre-settled status are allowed to work in the UK. Employers will need to check that all staff they employ have the right to work in the UK. 

Businesses that intend to employ EU nationals to come to the UK for work (after 31 December 2020) need to take into consideration the UK’s post-Brexit immigration system. This includes a points-based immigration system for workers (the ‘Skilled Worker visa’), setting certain requirements for foreign workers to enter the country for employment. The potential employee should:

• have a job offer from an approved employer-sponsor

• for a position that requires at least A level (or equivalent) qualifications

• speak English

• be paid at least £25,600

Your business will need to register for a sponsor licence from the UK government in order to support foreign workers in satisfying these requirements. You should also check that the foreign worker has the right to work in the UK using the government’s Employer Checking Service online.

There is also a UK government Global Talent Scheme to fast-track immigration for highly-skilled scientists and researchers to enter the UK without a job offer. Individuals hired through the Global Talent Scheme will not require a business sponsor. 

Please note, that none of the above applies to Irish citizens, whose current rights to live and work in the UK are not affected by Brexit. 

Employing UK nationals in the EU

Due to leaving the EU, UK nationals no longer benefit from the Free Movement of People. Therefore, EU businesses that employ UK nationals in EU member states will need to take into account new immigration rules in the relevant jurisdiction of their place of work. This may include applying for a work permit or visa, which may take time to obtain. UK staff working in the EU that drive as part of their job may need to apply for an International Driving Permit. 

For further information on immigration issues, read Brexit for individuals. 

Remote working from another country

Where an employee is based in an EU member state and will be working remotely from that member state for a UK business, there are important legal issues to consider. 

An employee working remotely in an EU member state will be under the jurisdiction of that country’s employment law. This means that the UK business must abide by the employee’s local laws on national minimum pay, annual holiday entitlements and statutory procedures on termination with regard to the remote worker. 

Remote working across borders also raises tax issues, as it is unclear whether the employee's income tax should be paid to the UK or their home country. You should check the Government website to see if the UK has a double taxation agreement to prevent employees from having to pay taxes in both jurisdictions. 

There is also a risk that an employee working in a different member state to that of the employer and who has authority to legally bind the employer could be judged as holding a ‘permanent establishment’ in the member state in which they reside. In this case, the employer may be liable for corporation tax in the employee’s home country on the profits that are attributable to that employee’s business activity. Ask a lawyer for more information on this tricky issue.

If you are concerned about the implications of Brexit on your employees, you may wish to amend the terms of their employment contract to account for Brexit-related disruption.

Force majeure is a specific clause that is often included in a commercial contract. It refers to situations where an agreement cannot be performed (eg the obligation to provide payment) because of circumstances outside the control of the parties. Where these circumstances arise and prevent the contractual obligations from being fulfilled, the contract is temporarily suspended and can even be terminated if the circumstances do not change. 

Most force majeure clauses set out the specific circumstances in which the clause will operate, known as ‘Force Majeure Events.’ Provisions often cover natural disasters like hurricanes, floods, earthquakes, and weather disturbances (sometimes referred to as ‘acts of God’). Other covered events may include war, terrorism or threats of terrorism, civil disorder, labour strikes or disruptions, fire, disease or medical epidemics or outbreaks.

As Brexit does not fall into any of the standard Force Majeure Events, Brexit-related disruption would need to be specifically referred to in a force majeure clause. Where Brexit is not mentioned, a business is unlikely able to rely on its force majeure clause to suspend its contractual obligations.