There will be a significant change in the way business is conducted as the UK leaves the single market and EU laws are no longer applicable to England and Wales. During the short time we have left of 2020, the UK and the EU hopefully will negotiate a trade agreement with the aim of bringing such an agreement into force by the end of the transition period. However, it is inevitable significant and disruptive changes are coming. It is important that businesses give consideration to how Brexit may affect their business with or without a trade deal.
What should your business do now?
An important part of preparing for Brexit is understanding the strategic priorities and also risks for your business. Having a clear knowledge of this will ensure that you are devoting your focus on the right things. Understanding your company and the greatest areas of exposure to Brexit related change, together with new opportunities that it presents, will be vital to the ongoing success of most organizations.
To determine your opportunities, strengths as well as potential risks, conduct an audit of your business and consider the following questions:
- What jurisdictions does your business operate in or intend to operate?
- What are your highest risk supply chain contracts?
- What are your highest risk clients or customer contracts?
- What clauses do you have in your standard forms to mitigate the effects of Brexit?
- What clauses do you need to negotiate into your other contracts to mitigate the effects of Brexit?
- What options do you have in your contracts to terminate them if they become loss-making or otherwise unworkable due to Brexit?
- Do you need addition cyber security or GDPR provisions if transferring data into Europe?
- Do you have European investors or is now the time to reach further afield?
- Do you use European employees, will their visa/immigration requirements impact on you?
- Do you need to relocate; establish a branch or commercial arm in Europe to continue?
- Will you suffer from a resource issue or talent loss, if so what is Plan B?
Understanding your exposure to Brexit in existing or future contractual arrangements with suppliers and clients is vital. It may not be feasible to review every contract and it will certainly not be possible for most businesses to renegotiate every contract before the transition period ends. However, having knowledge of your high-risk existing contracts that could leave you open to a dispute, will ensure you are prepared should issues arise. Preparing new contracts for new engagements after Brexit, by prioritizing standard forms with tailored clauses, will also help to ensure you are prepared for life after the transition period ends.
Should you wait to see if a deal is agreed with the EU?
The end of the transition period is imminent, so time is of the essence. If there is a trade deal between the EU and the UK, the terms are yet unknown and waiting on details leaves you exposed. Most organisations will already have an idea of how Brexit will affect their operations – do you? Consideration of the questions listed above will provide a good idea of how your business may be affected, whether a trade deal is agreed or not and hopefully enable you to work through all scenarios and Plan B’s.
Our advice is to act now and ensure you are prepared for either eventuality. The businesses that will thrive in this uncertain environment are those who act now to understand the challenges and opportunities that Brexit presents. A well-planned Brexit strategy can help ensure the continuity of your company and those businesses who are already prepared for Brexit are even starting to see this as a competitive advantage.
What should you do next?
Many businesses will have previously conducted thorough risk assessments and contingency planning to identify the key areas of risk to their business in a no-deal scenario, given how protracted Brexit has become. Preparing and testing contingency plans is vital and it could be beneficial to seek professional advice. It ensures your business is ready for the end of the transition period, particularly given the ongoing economic implications of the COVID-19 pandemic.
Areas to considers:
- Business insurance ‘ a review should be undertaken to consider if there are any gaps or risks. Many have done this recently during the pandemic and been surprised at the gaps and exposure to the business;
- GDPR Data Protection ‘ what policies have you got in place and does your business transfer data between the U.K. and Europe safely and compliantly. Restricting access, monitoring the process and securing a robust security system will help secure your path forward
- Immigration ‘ consider any holes in regard to employees, suppliers and even distributors
All of these things have the ability to make or break many businesses. However, with preparation, these things can be carefully reviewed and set in place prior to the end of the year transition period. A brief summary of the above advice has been detailed below and we find often a third party like a tax advisor, lawyer or financial director could help with these and looking in from the outside often they have a different perspective that can help you too:
- Reorganization or restructuring options for your businesses
- Privacy and data protection regulatory implications
- The impact on human resources
- Current and future dispute resolution
- Drafting new contracts with tailored Brexit clauses
- Amending or advising on existing commercial contracts
- Negotiations with your financial institutes, investors, suppliers and distributers
Please get in touch for a consultation with one of our specialist solicitors if you have any concerns regarding Brexit and the implications for your business.