The UK and EU have secured a trade deal that removes tariffs and quotas on most goods. The EU and UK Trade and Cooperation Agreement (TCA), which was signed and provisionally applied on 30 December, replaces arrangements under the Withdrawal Agreement (transitional period). The UK is now out of the single market and became a “third country” under EU law on 1 January 2021. The new deal does not cover financial services as expected. The Government highlighted 6 key actions businesses may need to take to prepare for life outside of the EU, and also launched a series of on-demand videos to help businesses familiarise themselves with the new rules.
The FCA has emphasised the need for all UK firms with European Economic Area (EEA) customers to decide on an approach to serving existing contracts with them. Customers should be served in line with local law and local regulators’ expectations and be guided by achieving appropriate outcomes for customers. Firms which have customers in the EU who rely on UK bank accounts that may be closed are advised to identify impacted customers and work to implement alternative arrangements. The FCA also provided more information for UK retail banking firms following a statement from Dutch National Bank (DNB) confirming UK credit institutions cannot provide current or savings accounts to retail customers in the Netherlands following the end of the transition period. Short videos from the FCA’s Brexit webinar on preparing for the end of the transition period, can be found here.
The Government has published guidance on the functions of the Competition and Markets Authority (CMA) after the end of the transition period. This guidance will come into effect at 11pm UK time on 31 December 2020 and explains how Brexit will affect the powers and processes of the CMA for antitrust and cartel enforcement, merger control and consumer protection law enforcement. The document also explains how the CMA will approach the “transitional provisions” in the Withdrawal Agreement, insofar as they relate to the UK competition regime.
Guidance has also been published for EU businesses in preparation for the end of the transition period. The Department for International Trade has set out what taxes and tariffs EU business might need to pay when trading with the UK from 1 January 2021. After the transition period ends, the UK Global Tariff will apply to all goods imported into the UK unless an exception applies (for example, a trade agreement with the UK). Businesses must pay VAT on parcels sold to UK buyers if based outside of the UK and goods sent in parcels are worth £135 or less to UK buyers. If goods sent in parcels are worth over £135, the import VAT, Customs Duty (and Excise Duty where applicable) should be paid by the UK buyer and collected by the parcel operator. The Government has also set out what EU businesses need to do to export to the UK after the transition period ends. Guidance includes information on buying or selling goods, transporting goods from the EU to the UK, exporting food and drink, exporting fish to Great Britain, and more.
Under the UK-Switzerland Services Mobility Agreement, high quality access for UK service suppliers to the Swiss market will be maintained. UK professionals and other service workers will be allowed to continue travelling to Switzerland and work visa-free for up to 90 days per year. This deal, effective from 1 January 2021, will apply to sectors of the UK economy, including finance, consultancy, legal services, the tech sector and the creative industries. The initial agreement will last for two years to ensure continuity immediately after the transition period.
One in four tech companies in London fear they will not be able to survive a no-deal Brexit according to a new survey by Tech London Advocates. The findings from the survey suggest most concerns lie around the availability of capital, particularly for early stage startups, as well as concerns around supply chains and hiring. 75% of the 238 tech leaders surveyed warned that the combination of coronavirus and Brexit will reduce access to investment capital.
Please feel free to contact the Policy Team for further information on any of the matters raised in this update.
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