UK: Brexit Myth-Busting: A Brief Analysis For Business

The lead up to the UK's referendum on EU membership was characterised by contradictory claims and resulted in widespread confusion amongst businesses. This has continued post-vote, with even more political indecision, which is frustrating for clients trying to process the results of the referendum and to formulate strategies to move forward in the midst of political and economic uncertainty.

It is essential to remember that, until such time as the UK leaves the EU by invoking Article 50 of the Lisbon Treaty and thereby starting a two year negotiation process, it will remain an EU member and all EU laws will remain in full force in the UK.

At the time of writing, there has been no meaningful discussion between the UK and the EU on the type of trade deal that may be agreed, nor how quickly it will emerge. Many suspect it will be 'Brexit-lite' which, like Norway, will enable the UK to access Europe's 'single' market in return for the freedom of movement of people from the EU and a contribution to the EU budget.

There is simply no precedent for this situation and we cannot claim to know what will happen in the weeks and months ahead. However, we can offer clear guidance on some of the most unhelpful misconceptions that are circulating about Brexit. With a firmer grasp of the facts in the current environment, we hope that you will be able to do business with more confidence. As with any market volatility, we believe that every crisis creates risks and opportunities and we aim to provide pragmatic advice to navigate such situations.

We will update this page as events unfold, so please check back for further myth-busting facts and commentary. If you have any questions or comments on Brexit or doing business in the UK or beyond, please do not hesitate to contact us.

Corporate operations and M&A

  • The UK will remain a top place to do business for UK and European companies who wish to invest in the US, Asia, the Middle East and Russia.
  • Bilateral treaties between the UK and each of the members of the EU will remain in place and are likely to be reinforced.
  • A number of countries have stated that they will seek to conclude trade treaties with the UK, especially in the agricultural sector where the UK's existing EU treaty commitments currently restrict trading opportunities for non-EU countries. Some clients will be preparing to take advantage of the increased opportunities for trade on offer.
  • People will continue to send their children to be educated in the UK's private schools and higher education institutions, and they will want to stay on to work in the UK and to buy property for their children.
  • Companies are expected to push ahead with M&A activity if there is a good investment or strategic rationale, especially if the transaction is largely UK focused.
  • Some foreign businesses will consider whether to invest (including on large cap-ex projects) in the UK until the terms of Brexit become clearer.
  • There will also be opportunities. For example, the short term fall in sterling may see some foreign clients take advantage of what might be a brief investment window to acquire or establish businesses in the UK.
  • The current uncertainty may help clients negotiate more favourable terms with their counter-parts, especially if the relevant transaction has not yet completed. Clients should review their contracts and consider whether Brexit might trigger a material adverse change or force majeure and the contract's continued effectiveness.


  • Freedom of movement within the UK and EU remains the same until the former leaves, and further border controls will not be imposed until this time.
  • We expect that transitional provisions will be introduced for European Economic Area (EEA) nationals and their family members already in the UK who have not yet been here long enough to have acquired the right of permanent residence. These transitional provisions will be for two years after the UK gives formal notice to the EU or longer by mutual agreement.
  • There has been much talk about the introduction of a points based system for all non-British citizens, valuing certain skills and qualifications. If this is introduced, it would most likely be achieved by adjusting the existing points based system for non-EU nationals and by launching the so-far unused Tier 3 for unskilled labour.

Banking and finance

  • The Bank of England has confirmed it will take appropriate measures to underpin market confidence and demand in the real economy and provide cheap funding to banks.
  • Banks will need to lend despite the uncertainty and will continue to do so, albeit loan to cost ratios may be lower in the short term.
  • Market volatility could affect the value of collateral supporting margin loans and other similar facilities. Consideration should be given to hedging arrangements to mitigate volatility.
  • International banks currently see no change in their lending profiles.

Financial services regulatory

  • Until Article 50 is triggered and the two-year negotiation period expires, it is business as usual for compliance. Firms will continue to be subject to Single Market regulations and should continue to work on MiFID II implementation at the beginning of 2018.
  • The Alternative Investment Fund Managers Directive (AIFMD) creates a Single Market for the management and marketing of hedge, private equity, venture capital and other unregulated funds. This is one piece of EU legislation that extends the availability of the 'passport' to managers established in non-EEA countries. The granting of this passport depends largely on equivalence, and, as the UK has fully implemented AIFMD, there is no reason to think that the UK would not be granted prompt access to the EU market for unregulated funds.
  • From 2018, MiFID II will expressly permit non-EEA, third country firms to provide investment services or perform investment activities on behalf of EEA professional and institutional customers on a branch or cross-border services basis.
  • While it is business as usual for now, it may be prudent to consider the timing of any prospectus, public offering of debt or equity securities to take advantage of the favourable passporting arrangements that currently apply within the EU.
  • Public companies may need to consider whether to make additional risk factor or other disclosures as to the likely impact of Brexit on their operations and financial statements.
  • Given the globalisation of the capital markets, if the centre of influence shifts from London as a key financial centre to Germany, for instance, it may give European companies trying to access public capital further cause to look to their local stock exchanges.

Corporate tax

  • The UK government is keen to demonstrate the UK's continued competitiveness and the UK has a low rate of corporation tax by the standards of G20 countries that applies to most income and capital gains. The current rate of 20% tax rate will be reduced to 19% on 1st April 2017 and to 17% on 1st April 2020. Chancellor George Osborne has suggested reducing it to 15%.
  • The UK operates a withholding tax at the rate of 20% for payments of annual interest and certain royalties to non-UK residents under domestic law. In the majority of cases when interest and royalties are paid by a UK company to a non-resident onshore shareholder there will be no withholding tax because of a relieving provision in the interest or royalty article of the relevant double taxation agreement. The UK has the widest network of double taxation agreements of any country in the world.
  • The UK does not operate any withholding tax system on dividends, so a UK resident company can automatically pay dividends gross to any shareholder whether resident in the UK or not.
  • The UK has a broad (and complex) exemption system for inbound dividends received from both resident and non-resident subsidiaries. Most dividends will, in practice, be exempt from tax, although there will be some circumstances where exemption will not apply - for example where the dividend is a deductible item in the jurisdiction of the company paying the dividend.
  • The UK operates a participation exemption system for the taxation of capital gains that arise on a disposal of shares in underlying subsidiaries. There is currently an ongoing consultation underway which is focused on reviewing the conditions of the exemption and it is possible that some of these will be relaxed so that the exemption becomes wider.
  • The UK does not tax capital gains made by non-resident individual or corporate shareholders of UK resident companies;
  • Stamp duty at the rate of 0.5% of the sale price is payable by the transferee on a sale of the shares in a UK company.

Data protection

  • UK Data Protection Act and Privacy & Electronic Communications Regulations (which implement and reflect the EU Data Protection and ePrivacy Directives) remain fully in place for at least another two to three years.
  • It is extremely unlikely that we will see a departure from EU-style data protection laws, as this would be a pre-requisite to any form of trading relationship with the EU/EEA:

Intellectual property

  • The EU has attempted to harmonize certain IP laws through various Directives and Regulations, but we expect existing English laws regarding copyright, trademarks, designs rights and database laws that implement EU Directives to remain unaffected. However, when the terms of Brexit are finalised, the potential changes to pan-EU IP rights and enforcement need to be considered as part of any IP portfolio strategy.
  • Many international conventions that affect IP law are not EU derived (e.g. the Berne Convention; the World Trade Organisation 'TRIPS' agreement; Madrid System in respect of 'international trade marks' and the 'European Patent' and Patent Co-operation Treaty).
  • Five key areas that need to be addressed in any Brexit negotiations and monitored by companies and clients are:

    Current EU Registered Rights: The EU Trade Mark and EU Registered Designs system administered by the EU IPO provides a single registration covering all 28 EU member states. If this no longer extends to the UK, then UK national registration and continuing protection for the 'UK rights' element should be considered at the appropriate time. If the UK exits the EU IPO regime, some form of transitional relief for existing EU registrations where the owner wishes to still protect their UK rights would be a reasonable likelihood (e.g. the option to 'grandfather' an EU registration into both an EU and UK registration).

    The new EU Unitary Patent: Brexit will probably not affect the current UK patent system. However, the proposed agreement for an EU Unitary Patent and Unitary Patent Court (UPC) which was due to be ratified by the UK this year to take effect will almost certainly be delayed.

    Unregistered Community Designs (UCDs): UCD rights are a product of EU Regulation creating a right that covers all of the EU. Post-Brexit this may no longer apply in the UK. The UK has an unregistered UK design right, although this is different in scope and length of protection so we are likely to see amendments to the UK designs regime as a response at some point.

    IP Enforcement: depending on the type of Brexit arrangements, the UK may no longer be a party to the Brussels Regulation (as recently recast), which deals with allocation of jurisdiction and the enforcement and reciprocity of judgments across the EU Member States, so may make questions of this nature more complicated. It also remains to be seen how Brexit affects IP enforcement strategy and the use of English governing law or jurisdiction in contracts. Longer term, we could gradually see rulings from the EU courts no longer influencing English court decisions on IP issues. 'Exhaustion of rights' rules may also be impacted.

    Licensing and Other IP Agreements: any licenses or other agreements covering 'EU' rights or that grant rights on an EU wide basis (e.g. taking IP as security) which are intended to include the UK will need to be revisited and amended.

Disputes and contractual relations

  • There will be no changes to existing dispute resolution procedures until the UK officially exits the EU. At that point, many procedures that have been applied throughout the EU may need to be replaced with domestic rules.
  • Some of the current benefits of cross-border judicial co-operation may be preserved if a position in relation to the EU akin to that of Norway, Switzerland and Iceland can be secured.
  • Those trading or dealing with counterparties in the EU should review their existing contracts to ensure that the dispute provisions still continue to be effective.
  • Those negotiating contracts over the next few months should consider preferring arbitration to resolve any disputes to ensure a more certain enforcement route.
  • Parties should assess whether their existing choice of jurisdiction and law to govern their contractual disputes is recognized by EU member states. UK parties may no longer have any protection against parallel court proceedings being started against them elsewhere in the EU.
  • The extent of co-operation with other member states in the liquidation of multi-national companies and in cross-border bankruptcies will change.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions