Ukie's No Deal Brexit survival guide

Ukie's No Deal Brexit Survival Signposting Guide

Last update: 30/7/2019

With Boris Johnson becoming Prime Minister and no deal preparations increasing, there is a higher chance that the UK will leave the EU without a deal on the 31st of October.

Though we strongly believe that no-deal should be categorically ruled out as an option – and that most members of Parliament have indicated that it is an undesirable option -  we understand that businesses must make preparations for all eventualities.

That’s why we have pulled together this guide on how games and interactive entertainment businesses can prepare in case of a no-deal Brexit.

Our State of Play report – which was released in March 2017 prior to the activation of Article 50 - found that the following issues were highlighted as key areas of concern for the sector:

  • Access to Talent
  • Access to Markets
  • Free movement of data
  • Funding

In this guide, we will examine some of the key challenges that could emerge in each of these areas as a result of a no-deal Brexit. We will then explain what steps you should consider taking to overcome these problems to help you prepare for the eventuality. 

For further information about planning for a no deal Brexit, the government has also advised that businesses register to receive updated from HMRC by following the link listed here.

This is by no means a comprehensive guide and the situation is changing all the time. Issues such as the potential impact on consumer protection rights, our ongoing relationship with the Digital Single Market strategy or Intellectual Property Law are all worth considering as we approach October 31st. As always, feel free to contact our policy team with any questions: 

 

CONTENTS

 

  1. ACCESS TO TALENT
    1. What will happen to the immigration system in a no-deal Brexit?
    2. What about workplace rights?
  2. ACCESS TO MARKETS
    1. Will games-related products face tariffs?
    2. Will VAT be affected in a no-deal Brexit?
    3. What is the UK VAT Mini One Stop Shop (MOSS) and will it be affected?
  3. FREE MOVEMENT OF DATA
    1. Can I still send and receive data to/from the EU?
    2. What is the one-stop-shop system for data protection and will it be affected?
  4. FUNDING
    1. Will Brexit affect UK tax reliefs?
    2. What about European funding?
  5. COPYRIGHT
 

ACCESS TO TALENT

What will happen to the immigration system in a no-deal Brexit?

In the case of a no-deal Brexit, freedom of movement will end immediately on the 31st of October upon the conclusion of the Article 50 process – which would mean there would be no transition period for businesses or individuals.

For EEA citizens already residing in the UK, the Government has confirmed that these citizen’s rights - including the right to work - will be protected in a no-deal scenario.

For EEA citizens wanting to visit, work or study after the 31st of October, you will still be able to do so. For stays longer than 3 months, a European Temporary Leave to Remain will be required. A European Temporary Leave to Remain will be valid for 3 years. Information regarding a European Temporary Leave to Remain cna be found here. 

An EU Settlement Scheme is currently open for EU, EEA or Swiss citizens to apply for if they intend to continue living in the UK after 30 June 2021.

The deadline for applying will be the 31st December 2020. Any EU/EEA/Swiss Citizen who is living in the UK before it's departure from the EU is eligible. 

Its free to apply.

Caroline Noakes MP, Minister of State for Immigration, has stated that:

  • Employers will continue to carry out right to work checks on EU citizens, who will evidence their right to work by showing a passport or national identity card
  • Employers will not be expected to differentiate between resident EU citizens and those arriving after exit

A new UK immigration system is intended to be implemented from the 1st of January 2021. The new immigration system was outlined in the Government’s immigration White Paper. It proposes a single, skills-based immigration system for both EU and non-EU citizens.

Alternatively, if the job position you are recruiting for is on the Shortage Occupation List (SOL), certain requirments such as a possible salary threshold will be non-applicable.

We advise that you communicate with your employees the importance of these dates, and that you apply for settled status as soon as you can if necessary.

What about workplace rights?

In the Government’s technical notes which provide advice for businesses in the event of a no-deal Brexit, they state that “almost all workplace rights” will be “transferred to UK law”.

 

ACCESS TO MARKETS

Will games-related products face tariffs?

If the UK leaves without a deal, the UK will fall back on World Trade Organisation rules.

WTO rules treat sales of packaged software as “products” that are covered by the 1996 WTO Information Technology Agreement. This Agreement eliminated tariffs on a broad range of high technology products, including packaged software and hardware.

However, there is a risk of border delays due to reduced access across the straits at Dover and Folkestone for up to six months.

Will VAT be affected in a no-deal Brexit?

The Government’s aim is to keep VAT procedures as close to possible to what they are now. In a no-deal Brexit, the current rules for imports from non-EU countries will also apply to imports from the EU.

UK VAT Mini One Stop Shop

If the UK leaves the EU without an agreement, businesses that sell digital services to consumers in the EU will be required to register for the VAT Mini One Stop Shop (MOSS) non-union scheme.

MOSS is an online service that allows EU businesses that sell digital services to consumers in other EU member states to report and pay VAT via a single return and payment in their home Member State. Non-EU businesses can also use the system by registering in an EU Member State.

If the UK leaves the EU with no agreement, businesses will no longer be able to use the UK’s MOSS portal to report and pay VAT on sales of digital services to consumers in the EU.

Businesses that want to continue to use the MOSS system will need to register for the VAT MOSS non-Union scheme in an EU Member State. This can only be done after the date the UK leaves the EU and within 10 days of the first trade after leaving.

 

FREE MOVEMENT OF DATA

Can I still send and receive personal data to/from the EU?

The Data Protection Act 2018 would remain in place, and the EU withdrawal Act would incorporate GDPR into UK law. You can continue to send personal data from the UK into the EU. This is due to the degree of alignment between the UK and EU’s data protection regimes.

However, the potential issue is with personal data being sent to the UK from the EU

What is needed is a Data Adequacy Agreement (an agreement allowing freedom of data movement).  However the Commission has stated that a decision on adequacy cannot be fully agreed upon until Britain is a third country.

This means that in the case of a no-deal Brexit, an adequacy decision is unlikely to be in place by the exit date of the 31st October 2019.

It is advised that UK and EU organisations take steps to mitigate the possible impacts of this by using alternative ways of transfer. The ICO recommends using standard data protection clauses (more below).

Please get in touch if you have any questions or follow up.

What do I do in regards to European Data Protection?

Article 27 of the GDPR requires organisations (controllers and processors) not established in the EU but that offer goods or services to individuals in the EEA, or monitor the behaviour of individuals located in the EEA, to appoint a representative based in the EU. 

This representative will act as your local representative with individuals and data protection authorities in the EEA. This is separate from DPO obligations, and your representative cannot be your DPO or one of your processors.

You do not need to appoint a representative if you are a public authority, or if your processing is only occasional, low-risk, and does not involve special category or criminal offence data on a large scale.

The representative can either be an individual or exercised based on a service contract concluded with an individual or an organisation (such as law firms, consultancies, private companies, etc.) One representative can also act on behalf of several non-EU controllers and processors.

The European Data Protection Board are in the process of publishing further guidance on this requirement. Please also consult the ICO website for more information.

UK domestic law places the same requirement on EU organisations.

What about One-Stop-Shop?

If you carry out data processing which impacts individuals in more than one EU/EEA state, you only need to deal with a single EEA data protection regulatory authority. This means a single supervisory authority will act as the lead on behalf of the other EEA supervisory authorities.

But after the exit date in a no deal brexit, the ICO may no longer be part of the one-stop-shop system. 

The ICO recommends that you:

  • Consider whether any of your processing of personal data involves cross-border processing under the GDPR, and if so who your lead supervisory authority is.
  • Consider whether you will continue to carry out cross-border processing after exit date.
  • If you will continue to carry out cross-border processing, and your current lead authority is the ICO, review the EDPB guidance, and consider which other EU and EEA supervisory authority will become lead authority on exit date (if any). You may want to contact them closer to exit date.
  • If you will no longer carry out cross-border processing after exit date, but your processing will continue to be within the scope of the EU GDPR (for example, if you are “targeting” individuals in the EEA), this could be a key change for your business and you may want to consider its impact.

 

 

FUNDING

Will Brexit affect UK tax reliefs?

The UK’s Creative Sector Tax Reliefs will not be affected by Brexit.

Content will still qualify for the VGTR if it passes the UK’s relevant cultural test. Creative sector cultural tests will also continue to recognise EEA content and personnel regardless of whether the UK secures a deal with the EU.

Some minor changes will be required if the UK is to continue to qualify for incentives in some EU member states after it has left the EU. UK Government, in conjunction with BFI, is working to ensure that member states reassess the mechanisms by which they assess the eligibility of content and personnel for these incentives to ensure the UK still qualifies.

In the event of no deal, UK personnel will have EEA status until 31st October 2019. Those planning on accessing other countries’ incentives should seek advice from the BFI.

In addition, there are no major changes expected to the UK’s State Aid regime under either deal or no deal. This regime helps regulate how Government provides help to private industry, ensuring a level playing field for businesses operating across the UK and influencing their level of competitiveness relative to international counterparts too.

What about European funding?

Following 31st October 2019, the UK will no longer benefit from future funding for projects under EU programmes.

However, existing projects, such as Creative Europe, agreed before the exit date have been guaranteed.

If you are in receipt, or have submitted a bid, for Creative Europe funds (or other EU-funded programmes), then you need to submit a registration form here.

This will ensure that the responsible department has the correct information about approved and pending projects and participants – helping to underwrite and guarantee funding.

COPYRIGHT

What about copyright law?

In regards to copyright law, there is no single worldwide or EU-wide copyright standard, however, there is generally harmonisation internationally and within the EU.

UK copyright law is substantially derived from the EU copyright framework - as a result, there are references to the EU, EEA or member states within UK law. In preparation for a no deal Brexit, an amendment is being introduced that removes such references in UK law. 

The Government has explained that UK and EU copyright works will still be protected in their respective territories due to wider international treaties. It states that participation in such treatiwa does "not depend on our relationship with the EU". However, for consumers, some laws agreed with the EU will have to cease following a no deal Brexit; for example, currently online content services have to provide the same content they usually would in the UK to a UK customer temporarily present in another EU member state. Of course, in a no deal Brexit, this would have to end.

Any further questions?

Some useful links to additional information can be found here:

Feel free to get in touch with our policy team

Alternatively, we have a number of legal partners we can connect you with.

This Q&A contains general information. Any legal information is not advice and should not be treated as such. Any legal information in this Q&A is provided without any representations or warranties, express or implied, in particular we do not warrant that any information is true, accurate, complete, current or non-misleading. No lawyer client relationship shall be created through the use of this Q&A. You must not rely on any information contained in this Q&A. If you have any questions about any legal or finance matter contained in this Q&A, you should consult your own lawyer or finance professional. Nothing in this disclaimer excludes or limits liability for death or personal injury, for fraud or fraudulent misrepresentation or in any way not permitted under applicable law.

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