Brexit and SMEs – what you need to know


min read

Brexit and SMEs – what you need to know

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Brexit. Whether you're for or against it, there's no doubt that there's an element of accompanying uncertainty – especially for small business owners. While it can be difficult to forsee what may happen, there are some things you can do to prepare your business for what's to come.

We've gathered the key information on the most important Brexit topics, direct from the the experts. From what to do if your business trades overseas to GDPR and data practice.


Tracey Hudson
Executive director, The HR Dept

If you currently employ EU workers, says Hudson, they may well be concerned about what will happen after Brexit.

“Our advice is to support those workers by allowing them time to apply for settled status,” she says. “It’s straightforward to do via an app and takes less than 15 minutes, so it should be easy for you to help your employees through this.”

There is no harm in them doing it in the unlikely event that we stay within the EU, she says, so it’s best to play safe and get on with it.

“Now’s also a good time to review all employees’ files and check that you have the correct documentation in place to confirm right-to-work eligibility status across the company,” she says.

There are so many rumours about employment laws that will change post-Brexit, but Hudson says that they are based mostly on unfounded speculation.

“Nothing will change in the short term,” she insists. “Even if the government does decide to focus on particular areas of employment law in the future, we will all have plenty of time to prepare for it.”

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Trading overseas

Nigel Wilcock
Executive director, Institute of Economic Development

According to Wilcock, all UK businesses currently exporting to Europe who are unfamiliar with trading further afield need to contact their Chamber of Commerce to understand the post-Brexit paperwork required. This is a must, he says, because UK businesses who export to the EU now need to know how tariffs, legislations, customs-related paperwork and other things function.

“They need a system in place to complete the documentation whenever it is required,” says Wilcock. “It will be essential to avoiding any disruption to exporting.”

The costs of trade may also have an impact on SMEs, he cautions.

“It remains possible that the UK will have some time between the end of a transition period and the agreement of a future trade deal when the UK is operating on third country terms,” he explains. Business owners can learn about the tariff implications for different types of product/service by consulting the EC tariff database and selecting another third country for the product they export.

Finally, says Wilcock, for businesses importing directly, the UK Government has produced its proposed trade tariff rates that would be applied in the event of Brexit without a trade deal.

“These are freely available but have not received much publicity,” he says.

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GDPR and data

Suzanne Dibble
Data protection lawyer and author of GDPR for Dummies

“If the UK leaves the EU without a deal in place,” says Dibble, “we will become a ‘third country’ without an ‘adequacy finding’ – meaning the EU will not deem the UK to have a sufficiently high standard of data protection for transfers of personal data from the EU to the UK.”

Any such transfers, she says, will therefore require additional protection such as standard contractual clauses to be put into place, which is not always easy.

“This may mean that EU businesses will prefer to choose to work with EU suppliers rather than UK suppliers,” says Dibble, who adds that it may take up to three years for the UK to obtain an adequacy finding.

The good news? If the UK does secure a deal with the EU, Dibble says we will be deemed an ‘adequate country’ and no safeguards will be required for personal data transfers from the EU to the UK. Deal or not, she says the transfer of personal data from the UK to the EU will continue on an unrestricted basis.

However, she adds, UK businesses that process the personal data of people from the EU will need to appoint a representative in the EU to liaise with EU data protection regulators (unless certain limited exemptions apply), which will mean extra costs.

More info

Intellectual property

Penelope Gibson
International IP strategist and founder, Quedo IP

Perhaps the biggest issue, says Gibson, is that up until now, harmonised intellectual property (IP) law across Europe has made things easy for UK SMEs.

“Companies have got used to it and might not realise what it means to think nationally,” she says. “While many IP rights will be unaffected by Brexit – copyright, for example, which is equally governed by international law – others, including trade marks, registered designs, plant varieties, rights in databases, geographical indicators and unregistered rights will not transition so smoothly.”

To avoid losing rights – or infringing those of others – Gibson says businesses should check the scope and termination clauses of their IP agreements. “Also, consider whether your activity will constitute parallel exportation and how you might renegotiate terms,” she says.

There’s more. Gibson says that SMEs should review their application and priority data (pay attention to country of origin and filing date) because, under a withdrawal agreement, the registration, grant and protection of EU rights may convert to UK-only.

“In the event of a no-deal Brexit, EU trade marks, registered and unregistered designs and database rights will no longer be valid in the UK and seniority claims will cease to have effect,” Gibson warns. “New, national applications may be needed.”

More info:

European grants and aid

Mark Tighe
CEO, Catax

Tighe says that businesses worried about their funding post-Brexit should take solace in the fact that the government is well aware of the importance of research and development to the UK economy.

“The UK government has already said it will underwrite Horizon 2020 funding [the EUs €79bn R&D programme] for project submissions made while the UK remains in the EU,” he says, “although businesses may not know they need to register if they plan to take advantage of this.”

If you are a company that can’t benefit, he says that all may not be lost.

“The guarantee has also been extended to cover projects that are able to participate as third countries after the Brexit date until the end of 2020,” he explains.

Some firms, he says, have expressed concern about whether patents registered overseas will continue to qualify post-Brexit, especially when Patent Box tax relief can be hugely valuable to companies that invest heavily in research and development.

“Eligibility is based on domestic, rather than EU legislation, so you shouldn’t expect any negative consequences of Brexit,” says Tighe. “In fact, it could be quite the opposite. Once freed from state aid rules, the UK government would be free to increase incentives to encourage more businesses to locate in Britain.”

Businesses can prepare for this, he says, by doing a full audit of their intellectual property, ensuring all patent protections are in place and that the maximum tax reliefs are being claimed.

More info

Words by
Mike Peake
Article updated on:
January 20, 2020

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