Following the news that several UK banks have notified their retail and business customers that they will lose their UK accounts before or when the Brexit transition period ends on 31 December, there is now some uncertainty about the implications for businesses. We have had enquiries from businesses who have suddenly encountered issues with EU customers who have been unable to pay into the UK accounts. This can have a devastating impact on cashflow, not something any business needs on top of the current economic challenges and uncertainties.
Whilst most businesses have considered their Brexit planning many months ago, before the first deadline, the realities of the banking arrangements may require many to revisit their arrangements. It may be costly to make assumptions about what may continue to work post 31st December when the ‘passporting’ arrangement comes to an end.
The banks are having to unpick the legislation of 30 different countries to work out if they can continue serving customers.
“Where possible, firms want to keep providing banking services to customers living in the EEA after the transition period,” said a spokesperson from UK Finance, the banks’ trading body.
“The impact on each customer will vary depending on the operating model of their bank or provider, the product or service being provided, and the legal and regulatory framework in the country in which they are resident.”
One approach to minimise complications may be for British businesses to establish an EU subsidiary.
We have heard that some British businesses have spent months recently trying to get paid by EU customers, given the 1st January is almost upon us, it may be wise to have a subsidiary in place as a precautionary measure. It is a relatively quick thing to set up and can be in place in time.