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Seven legal implications UK SME owners should be aware of before Brexit deadline

10 Oct 2019

Small business owners should be planning for the impending exit from the EU on October 31. Commercial legal solicitors, Spratt Endicott have shared their top tips SME business owners should be aware of and putting into action in a bid to place their business in the best possible position ahead of the Brexit deadline.

New research from the Federation of Small Businesses (FSB) has revealed small businesses are in urgent need of more government support to help overcome a concerning lack of preparation for a no-deal Brexit. Research reveals only one in five business owners (21 per cent) have planned or prepared for anticipated issues following the UK leaving the EU on October 31.

Catherine O’Riordan, at Spratt Endicott, said: “The growing concern for SME business owners is to understand what a no-deal Brexit means for them and how best to prepare. It’s essential that small businesses take action to prepare for a no-deal situation and business owners understand the impact Brexit is likely to have on their organisation and other businesses in their supply chain – in the short term and the long term.

Catherine O’Riordan has some top tips on what to do to prepare your business or organisation for Brexit:

1. International supply chain – In the event of a no-deal Brexit, the UK will leave the EU Customs Union and become a third country for the purposes of EU import/export control. Trade between the UK and the remaining EU member states will subject to duties and customs procedural requirements. Businesses should consider the possible effect of tariffs on the costs of imports and exports.

2. Workforce – It is not clear whether the rights of UK and EU employees working in the UK will change after a no-deal Brexit. However, businesses employing EU, EEA and Swiss citizens[ii] will need to prove employees’ right to work using their passport or national identity card and their status under the EU Settlement Scheme. Recruitment strategies may need to be reviewed, particularly if your business is reliant on lower-skilled EU workers.

3. Insurance cover – Business owners are advised to review their insurance policies to check that they are covered for delays or cancellations in the production of goods or the provision of services. If business owners are stockpiling, it’s worth confirming the the sum insured under the business policy is sufficient to cover the additional stock.

4. Force Majeure – Broadly, force majeure provisions excuse a party from liability if that party is unable to perform its contractual obligations because of an event outside its control. Businesses should review force majeure provisions in contracts with customers and suppliers and consider whether they could be triggered by Brexit.

5. Intellectual property rights – Registered EU trademarks or registered Community designs will continue to be valid in the rest of the EU after Brexit but will be protected in the UK by a new, equivalent UK right. Businesses which have applied for an EU trademark or registered Community design which has not been granted at the date the UK leaves the EU will have to apply for the new UK right.

6. .eu domain names – .eu domain names are available to businesses established in the EU or the EEA. UK-based registrants of .eu domain names will have a 2 month grace period to demonstrate that they comply with the eligibility criteria ie that they have a legally established entity in the EEA , failing which their .eu domain name will be withdrawn. Businesses should review their domain name portfolios and consider how to deal with existing .eu domain names.

7. Personal Data – In leaving the EU UK organisations can still send personal data to the EU27, but the EU27 will no longer be able to send personal data to the UK unless there is a different mechanism in place. The mechanism may be Binding Corporate Rules for organisations where the data is being received from overseas branches or (most commonly) Standard Contractual Clauses being incorporated into your agreements.

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