On 30 October, the Chancellor set out the 2024 Budget, which contained a significant number of changes that will affect businesses and individuals - taxes, wages, benefits, pensions and more.

More information is expected in the comings days and weeks and our experts are reviewing the key announcements and will provide a more detailed summary of the steps that you should take soon. 

What was announced?

The key announcements include:

• Business tax changes - including the Private Equity interest rate increasing to 32% from April 2025;
• Stamp duty up 2% for second properties;
• Employers National Insurance up 1.2%;
• Capital Gains Tax increasing;
• Reductions to Inheritance Tax reliefs; 
• Income tax thresholds increasing in 2028; and
• Changes to non-domiciled status. 

Given the relatively high volume of corporate deals being closed before 30 October 2024, our corporate team were keen to comment on the CGT increases and other business related expenses.

The rate of capital gains tax (CGT) has increased from 10% to 18% for basic rate income tax payers, and from 20% to 24% for higher rate income tax payers These rate increases took effect on 30 October 2024.

The lifetime limit for Business Asset Disposal Relief (BADR), which reduces the CGT rate on certain disposals of shares business assets, is being kept at £1m, but from 6 April 2025 the relief will be less generous with the rate of CGT being 14% rather than the current 10%. From 6 April 2026 the resulting rate will be 18%.

How could the announcements affect you?

The CGT changes were less than feared, so we do not think many deals will immediately fall over as a result. We do expect there to be an uptick in deals involving owner managed businesses (where shareholders are looking to take advantage of Business Assets Disposal Relief before it goes up by the first 4% increase in April 2025). This will also present an opportunity for buyers in the market to get some good deals knowing that it’s important for a sale to happen prior to April 2025.

The impact of the wider tax changes (in particular national insurance and minimum wage) will likely reduce enterprise values offered for businesses coming to market as profit of the target businesses will be affected by increased costs.

What steps should you take now?

Sellers should carefully consider the impact of the tax changes of the final proceeds they will receive in their pocket on a sale. If it is critical for a sale to happen before April 2025, the process should be started as soon possible to ensure it happens well in advance of the deadline.

Acquirers should reassess their investment decisions, both for ongoing deals and new acquisitions to ensure they are not now overpaying.

A delay in a sale will cause an increase in tax payable, however that should be balanced with whether now is the right time to sell for the business and maximise its value.

Modern Slavery Act 2015

On 16 October 2024, a House of Lords Select Committee published a report on the Modern Slavery Act 2015.

The report recommends introducing legislation requiring large organisations (i.e. those with an annual turnover of £36 million) to carry out compulsory modern slavery supply chain due diligence. It also suggests introducing an enforcement body, which would act as a single point of contact for labour exploitation across the UK labour market.

How could it impact your business?

Current legislation requires large organisations to produce a statement in each financial year setting out the steps they have taken to address modern slavery, or a statement that they have taken no steps to do this. Smaller organisations can also voluntarily produce such statements.

It is proposed that the ability for organisations (that are subject to mandatory reporting) to report that they have taken no steps to address modern slavery in their supply chains be removed. Failure to report is proposed to lead to financial sanctions and be a criminal offence of the directors. This will require that organisations take active steps to address modern slavery in supply chains and report accordingly.

What steps should you take?

The Government is due to respond to the recommendations before the end of the year and it is proposed that legislation is introduced to tackle non-compliance, adopting a gradual approach - initial warnings, fines (as a percentage of turnover), court summons and directors’ disqualification.

As we expect sanctions to be introduced gradually over the next few years, so as to give companies time to adapt to these changes, at present we recommend large organisations review current practices, paying particular attention to due diligence in supply chains, assessing due diligence questionnaires and their current approach to reporting.

Warning letters issued by the CMA

The Competition and Markets Authority (CMA) has recently published a summary of the warning letters it sent to businesses in relation to potential infringements of competition law in 2023.

Businesses in the retail and wholesale market received the most warning letters (17%), followed closely by the technology products and heating equipment sectors (receiving 11% of letters each). Other sectors in receipt of CMA letters include household goods, recruitment services, agriculture and environment, recreation, healthcare, clothing, and advertising, demonstrating the breadth of sectors that the CMA is actively monitoring.

Whilst there has been a reduction in the total number of warning letters issued (47 in 2022 compared to 20 in 2023), this is more likely to be reflective of the CMA’s focus on its other enforcement tools and responsibilities, rather than a decline in anti-competitive behaviour. Recent letters issued by the CMA in relation to Green Claims, demonstrate that the CMA continues to use warning letters as a mechanism to place businesses on notice that their practices could be in breach of competition or consumer law.

How could it impact your business?

The CMA issues warning letters (either direct or by way of an open letter) where it has been made aware that certain businesses may be in breach of competition or consumer law. The report recently produced by the CMA addresses letters issued to organisations in relation to the Chapter I prohibition (the prohibition of anti-competitive agreements) and the Chapter II prohibition (the prohibition of abusing a dominant position) as set out in the Competition Act 1998. Of the letters issued in 2023, all of the letters warned against behaviour that could infringe the Chapter I prohibition, whilst only 10% of the letters referenced behaviour that may infringe the Chapter II prohibition, as detailed below:

• Chapter I Prohibition: Somewhat unsurprisingly, a large proportion (40%) of the letters issued by the CMA were in relation to resale price maintenance (RPM), with suppliers seeking to control the prices at which their products were sold throughout the supply chain. Whilst RPM may be permissible in very limited circumstances under the Vertical Agreement Block Exemption Order (VABEO), the letters from the CMA reinforce that use of RPM is a particularly risky strategy.

• Chapter II Prohibition: in each letter sent by the CMA in relation to alleged Chapter II infringements, the CMA also claimed that the same behaviour could constitute a Chapter I infringement. Both letters were in relation to market foreclosure in downstream or related markets, one in relation to restriction of online advertising platforms, and the other in relation to exclusivity arrangements. The letters from the CMA provide a vital reminder of the importance of reviewing commercial contracts from a competition perspective, in addition to the usual commercial review to ensure that your organisation is not inadvertently party to an anti-competitive agreement.

Where the CMA identifies that an organisation has breached competition law, the CMA has the following enforcement powers:

• Fines of up to 10% group worldwide turnover;

• Director disqualification, potentially for up to 15 years; and

• Potential criminal liability for those deemed to have entered into cartel arrangements.

What steps should you take?

If your business receives a warning letter from the CMA in relation to a potential breach of competition or consumer law, it is important that you act quickly and take advice on the nature of the breach. Our team can assist you in preparing a strategy to address the CMA’s concerns, including reviewing and remedying any non-compliant behaviours.

In addition, businesses selling to consumers should engage in a review of their consumer selling practices prior to the consumer provisions of the Digital Markets, Competition and Consumer Act (DMCC) coming into force in April to ensure that they are compliant with the DMCC and avoid receiving a warning letter or being subject of a CMA investigation.

The National Security and Investment Act: lessons from the annual report

Cabinet Office has recently published the long-awaited National Security and Investment Act 2021 (NSIA) annual report. The report provides valuable insights on a regulatory regime still very much in its naissance, and details trends identified in both NSI submissions and outcomes over the last year.

The NSIA came into force in January 2022 and introduced an investment security regime designed to give the Government greater oversight on transactions which may have an impact on national security. The NSIA creates a mandatory notification scheme for qualifying events (including acquisitions, share purchases over certain predefined thresholds, internal restructures and changes in voting rights) in relation to entities active in 17 sectors identified as having a particular interest for National Security (e.g. defence, AI, critical suppliers to government, transport etc.). However, the powers granted to the Secretary of State stretch further, granting the SoS the ability to intervene on any transactions for reasons of national security. This power is not limited to corporate transactions, and includes transactions involving sale, lease or license of property and/or assets (including intellectual property).

How could it impact your business?

Every year, Cabinet Office produces a report summarising various statistics on the functioning of the NSIA regime over the last 12 months. Key lessons from this year’s annual report are set out below:

Most notified sector: Defence
Defence has taken the baton for the sector responsible for the most notifications (48%), surpassing last year’s winner, Military and Dual Use. For those familiar with the NSIA process, this is no surprise; defence is one of the broadest mandatory notification sectors, capturing virtually all suppliers to the Ministry of Defence (both direct contractors and subcontractors). Despite a common misconception that only suppliers of military goods are caught by the regime, the guidance is clear that the requirement to notify goes beyond suppliers of military and dual use products to include (for example) suppliers of cleaning services to the MoD. Defence notifications dwarfed other notification sectors, with second and third going to Military and Dual Use (19%) and Critical Suppliers to Government (17%) respectively.

Timescales
Somewhat unsurprisingly, the report sets out that the average timeline for initial acceptance and review of a notification has increased – falling just within the permitted legislative timescales for review. Currently, initial acceptance of a notification is taking an average of 7 working days for acceptance of a mandatory notification, and 10 working days for a voluntary. In addition, transactions are taking an average of 29 working days to receive a decision on whether the transaction will be called in for further review or be cleared without further investigation.

Origin of investment
Whilst China remains the country receiving the highest level of scrutiny from the ISU (44% of all call-in notices vs 3% of notifications – 2% of which being voluntary), the UK is second (39%). There is a common misconception that transactions involving transfers of ownership from UK ownership to UK ownership will not receive scrutiny from the ISU, however, this report demonstrates that this is not the case.

Increasing interest in Higher Education
Despite not being a mandatory notification sector, the higher education sector was responsible for 24% of call-in notices in the last 12 months, whilst only accounting for 2% of all notifications. Even if a transaction is not subject to mandatory notification, it may still be notified under the voluntary notification process or called in retrospectively by the ISU for review. To manage risk in a transaction, parties may therefore wish to submit a voluntary notification in relation to higher education transactions.

The majority of transactions are not called in
For many transactions, the NSIA process is simply another administrative hurdle to jump through, albeit a rather lengthy one. Only 4.4% of transactions last year were called in for further review, falling from 7.2% the year prior.

What steps should you take?

The annual report serves as a timely reminder to consider NSIA risk early in any transaction. We are currently seeing a flurry of activity in the market, largely due to the Autumn Budget. As set out above, the majority of transactions will not be called in for further review, however failure to submit a mandatory notification where required is a criminal offence. Due to the anticipated tax rises in the Autumn Budget, sellers have been seeking to expedite transactions. Considering NSI at the very outset of a transaction allows buyers to consider whether any notification is required and submit notifications early, preventing an additional 8 weeks being added onto the transaction timeline.

The ISU is increasingly asking for proof of how NSIA risk has been assessed in a transaction where a mandatory notification is not made, to ensure that parties are fully engaging with their duty to consider NSIA as part of a transaction. Best practice therefore dictates that parties have a clear papertrail documenting an assessment of NSIA compliance.

There is hope amongst many corporate lawyers and financiers alike that the scope of the NSIA will be narrowed, or a de minimis threshold will be introduced. The report, however, shows no such intention. Instead, the Cabinet Office asserts that a number of legal systems have similar regimes, and that investment security is the new norm. Clearly the NSIA is here to stay.

Companies House new powers to crack down on poor corporate governance

The Economic Crime and Corporate Transparency Act 2023 is legislation aimed at strengthening the UK’s framework for tackling economic crime by enhancing corporate transparency. One way it seeks to do this is by granting additional powers to regulatory bodies, such as Companies House, to investigate and enforce compliance.

On 27 September 2024 Companies House released guidance regarding how it will use these powers to issue financial penalties against companies and LLPs. Such usage includes:

• issuing warning notices if Companies House suspects that there has been a breach of a “relevant offence” under the Companies Act 2006 by a company or LLP; and

• depending on Companies House’s decision it may choose to then issue a penalty notice where, at the end of the period in the warning notice, Companies House is satisfied beyond reasonable doubt that the company or LLP has committed a “relevant offence”. The financial penalty amount is then calculated in accordance with the Companies House guidance.

The Companies Act 2006 contains the “relevant offences” which centre around corporate governance and transparency. An example of a simple offence which a company could fall foul of is failing to notify Companies House of a director’s appointment or termination within 14 days. A financial penalty issued by Companies House is a civil sanction which is an alternative to bringing criminal proceedings, and Companies House will have complete discretion as to which to pursue.

How could it impact your business?

Good corporate governance, accurate and up-to-date filings and providing correct information to Companies House is at the forefront of why this guidance has been published.

Whilst aimed at preventing economic crime and catching the perpetrators, many companies or LLPs may inadvertently not be meeting these criteria and those who have not given it their full attention may well find themselves on the wrong side of Companies House who now, as a result of the new powers, will be taking an active role in crime prevention.

What steps should you take?

Companies and LLPs should review the information contained within their statutory registers as well as the information they currently have published at Companies House and ensure that all the information is accurate and up-to-date; any information which is not should be updated as soon as possible.

Companies should take particular care in making the required filings to update changes in ownership, directors and publishing their accounts. Should a Company or LLP not know how, or how best, to update such information it should seek professional advice.

Companies House full guidance can be found here.

LinkedIn suspends use of UK user data to train its AI models

On 20 September, the Information Commissioner’s Office (ICO) confirmed that LinkedIn has suspended processing its UK users' data to train its artificial intelligence (AI) models. Stephen Almond, the ICO’s Executive Director Regulatory Risk stated that: "We are pleased that LinkedIn has reflected on the concerns we raised about its approach to training generative AI models with information relating to its UK users. We welcome LinkedIn’s confirmation that it has suspended such model training pending further engagement with the ICO. In order to get the most out of generative AI and the opportunities it brings, it is crucial that the public can trust that their privacy rights will be respected from the outset. We will continue to monitor major developers of generative AI, including Microsoft and LinkedIn, to review the safeguards they have put in place and ensure the information rights of UK users are protected".

How could it impact your business?

The ICO’s attitude to the matter indicates its growing scrutiny of AI, in particular with regard to the use of personal data to train AI models. This is relevant to any business intending to develop its own AI models as, in order for an AI tool to be valuable, it must be trained. It also highlights the importance of risk assessing any use of AI throughout the entire lifecycle of the project; it can be easy to focus on the (perhaps more obvious) risks posed by the use of the AI tool and in doing so inadvertently overlook the potential risks involved in the development and training stages.

What steps should you take?

Prior to the development or use of any AI tool or product, we recommend a dedicated AI impact assessment to explore risks and identify mitigation strategies, along with a separate data protection impact assessment focusing on the personal data perspective. These processes should not be a paper exercise conducted superficially as part of the sign off process, but instead conducted at the very outset – if either impact assessment identifies a high unmitigable risk, it may not be possible to lawfully proceed.

Businesses looking to procure off the shelf AI products are not absolved of this need to risk assess, despite any vendor assurances that their tool is ‘GDPR compliant’. In light of the LinkedIn case, businesses looking to onboard such products should explore with the vendor how the AI tool has been trained and satisfy themselves as to the vendor’s level of data protection compliance, for example by way of supplier due diligence questionnaires.

Enforceability of Barristers fees under the Consumer Rights Act 2015

In a recent case, a client had instructed barristers on a direct access basis (i.e. without the involvement of solicitors) and the agreement provided that fees were to be paid in 4 instalments. The payment term provided that the advance fee for a hearing was still payable in full "if the hearing concludes early or is adjourned ... or does not go ahead for any reason beyond our control."

When the defendant's trial was subsequently adjourned, the client terminated the barristers' instructions and refused to pay the outstanding 2 instalments. The Court of Appeal held that this advance payment term was unfair and unenforceable under the Consumer Rights Act 2015 (CRA).

How could it impact your business?

While this is unlikely to have a direct effect on counsel instructed by clients with legal representatives, it is possible that there will be changes to terms provided by Counsel moving forward.

More generally, the Court of Appeal has clarified the following:

• Although the CRA does not allow the Court to assess the fairness of the contractual price itself, this exemption is a narrow one. Here the quantum of the fees was not in question; rather, the Court was asked to scrutinise the mechanics of the instalment plan.

• The payment term fell within the grey list of potentially unfair terms in the CRA in that it had "the … effect of requiring that, where the consumer decides not to conclude or perform the contract, the consumer must pay the trader a disproportionately high sum … for services which have not been supplied."

• For the purposes of the fairness test, the payment term created a significant imbalance in the parties' rights and obligations because it would oblige the client to pay in full regardless of how far in advance it became clear that the hearing would not go ahead, even if this was not the client's fault. There was an absence of good faith (as required for a finding of unfairness) because the payment term was not one a consumer would have agreed to in negotiations. That the client had read the contract and agreed to it was insufficient.

What steps should you take?

Although this is a case regarding the payment of barristers’ fees, it has wider implications. Any retailer or service provider dealing directly with consumers should ensure that any fees payable post termination of the contract are structured in such a way as to provide a genuine estimate of the company’s likely actual losses on termination. Indeed, it could be useful to provide a (proportionate) sliding scale of termination charges which would be more likely to find favour. Alternatively, wording such that the consumer will be required to provide reasonable compensation might also suffice.

The Employment Rights Bill

The Employment Rights Bill which, as previously stated, represents one of the biggest changes in direction to employment law we have seen in a generation was published on 10 October.

The Bill addresses the Labour Government’s pledge to rework the UK’s employment law framework in line with their stated aim of ending “one-sided flexibility” in employment arrangements, which the Government perceives operates only in favour of employers at present.

How could it impact your business?

Following the second reading on 21 October, the Government will now begin the process of consulting on the reforms and the Bill may be subject to several changes as it progresses through Parliament. Whilst the detail is still therefore unknown, businesses now have a clear picture of the areas that the Government is seeking to address.

Key proposals include:

1. Unfair dismissal – employees will have a right to claim for unfair dismissal from day one (subject to less stringent dismissal standards in the first nine months of employment). It is currently unclear how this day one right will work in conjunction with probationary periods, however, as part of the bill, we anticipate a new statutory probationary period of up to nine months.

2. Unpaid leave – it is proposed that unpaid parental, bereavement and paternity leave will become day one rights for employees. From the Bill it appears that this will extend to a wider group of persons, but we are yet to receive clarity, as this will follow consultations with the business community.

3. SSP – will be available from first day of sickness and the lower earnings limit, currently £123 per week, will be removed entirely. At present, the right to receive SSP only applies from the fourth day of illness.

4. Fair Work Agency – a new enforcement body will be created. It will also provide guidance and support to businesses on how they can comply with employment rights.

5. Zero hours contracts – it is proposed that individuals will have a right to be offered a guaranteed number of hours to reflect those worked over a ‘reference period’. At present, it is not clear how long this reference period will be, but it is expected to be 12 weeks. Employees will also need reasonable notice of changes to shifts and compensation where they’re cancelled or curtailed.

6. Enhanced maternity protection – the Bill will provide pregnant employees with enhanced protection for six months after they return to the workplace.

7. Collective redundancies – the threshold for ‘collective’ consultation will be a nationwide 20+ threshold which will be much easier to trigger.

8. Trade unions – enhanced powers for trade unions with a right of access, changes to recognition procedures and their ability to take industrial action more easily.

9. Flexible working – increased obligations on employees to act reasonably and justify decision on flexible working.

10. Written statement of particulars – employers must provide information to employees when joining and regularly throughout their employment of their right to join a trade union.

11. Fire and rehire prohibition - Where an employee is dismissed for refusing to agree a proposed change to their contract of employment, this dismissal will automatically be considered unfair unless the employer can show that:

    • they are experiencing financial difficulties, and the financial position was unviable or likely to become unviable;

    • the contractual change was made to prevent, reduce or mitigate financial difficulties; and

    • the requirement to change the terms of the contracts was reasonably unavoidable.

Guidance notes produced by the Government confirm that the vast majority of these laws won’t come into force until 2026 at the earliest, following consultation periods.

What steps should you take?

Aside from monitoring these expected changes, there may be steps you wish to take now. It may be a good time to consider employee change or harmonisation processes. Equally, some employers will use the time before the Bill is implemented to build flexibility into their employment contracts.

Navigating the complexities of Copyright Design Disputes

On 25 September, successful entrepreneur and business owner Ms Nicola Fletcher of Equisafety Limited, whose company sells high visibility garments for riders and horses, lost her claim against Woof Wear Limited in a copyright dispute.

Ms Fletcher initially caught the attention of the press following her appearance on Dragons’ Den back in 2015 where she went on to receive investment of £100,000 from 2 former Dragons.

The dispute began after Woof Wear showcased 3 equestrian garments at the Bede International Show back in 2020, allegedly similar to garments designed by Ms Fletcher - a riders’ high vis elasticated band worn over a riding hat, a high vis waistcoat worn by the rider, and a high vis neck band placed on the horse.

Ms Fletcher issued a claim out of the Intellectual Property Enterprise Court. She submitted that the garments were work of artistic craftmanship as set out in Section 4(1) (c) CDPA. However, Wool Wear argued that the designs were functional. The crux of the argument advanced by Woof Wear was that the items in question are high visibility garments worn for safety, not fashion and Ms Fletcher failed to satisfy the test for protection as works of artistic craftsmanship.

Secondly, the court found that Ms Fletcher had collaborated with Chinese manufacturers whilst finalising her designs. Importantly, Ms Fletcher failed to establish ownership of copyright as she was unable to define what was her “work” and what was works of “others”.

How could it impact your business?

The judgment provides valuable guidance concerning the application of copyright law to clothing design - it is clear the garment must be more than functional.

However, the case also highlights the more common issue when collaborating with third parties in being able to properly identify who owns what copyright material, as ownership and the ability to enforce is often blurred.

What steps should you take?

It is vital that, upon the creation of any “copyright work” under a third-party collaboration, the parties put their mind to identifying who owns what parts.

While this is usually an IP contractual requirement, it is often overlooked in practice and it is only dealt with sometimes years later when the individuals and knowledge involved have long departed the business. The result, as in this case, can be catastrophic to a claim in copyright.

EU Product Liability Directive

On 10 October 2024, the EU Council adopted the Product Liability Directive (Directive). The Directive revises the existing EU product liability rules, which have been in force for nearly forty years, bringing the laws on product liability into the 21st century, accounting for developments in the digital marketplace and the circular economy.

The Directive will enter into force twenty days after publication in the Official Journal, however Member States will have up to two years to transpose the Directive into their national laws.

The Directive will increase product liability risks for manufacturers, importers, distributors and other service providers. Not only does the Directive provide greater certainty for how product liability will apply to new technologies including AI and circular business models, but it also sets new no-fault liability presumptions, revised rules for disclosure of evidence, and compensation to persons who suffer damage caused by a defective product.

How could it impact your business?

The Directive aims to enhance consumer protection and modernise liability rules for defective products. Whilst the UK is no longer a member of the EU, and there is no indication at this time that the UK will be adopting the same approach as the EU as regards product liability, the Directive has extraterritorial effect and will apply in relation to all products traded in the EU, including those manufactured outside the EU.

The key changes and implications are:

• Expanded definition of products: the Directive broadens the definition of “product” to explicitly include software (including, crucially, artificial intelligence systems) and digital production documents (including CAD drawings). This revised definition has the effect of extending the rules on product liability to a much larger array of products, capturing significantly more businesses.

• Burden of Proof: the Directive eases the burden of proof placed on consumers to the point of effectively reversing the burden of proof for defective product liability through the introduction of a number of presumptions:

  • Firstly, a presumption that a product is defective where a defendant has failed to comply with disclosure obligations, or the claimant can show that the product did not meet mandatory safety requirements;

  • Secondly, a presumption of a causal link between a defective product and damage, where the cause of damage is difficult to demonstrate, and the damage is of a kind typically consistent with the defect in question; and

  • Finally, a presumption of both defectiveness of a product and a causal link to damage where the court concludes that a claimant faces excessive difficulties (particularly in relation to technical or scientific complexity) in proving the defect or the causal link and the claimant can demonstrate that it is likely that the product is defective, and/or that there is a causal link between the defect and the damage. This will make it simpler and easier for consumers to claim compensation and could lead to an increase in claims.

• Economic operators: Under the current regime, producers are liable for damage caused by defective products. Under the Directive, liability is attributed to all economic operators, with varying degrees of requirements for manufacturers, importers, distributors, fulfilment service providers and those within the control of the manufacturer, impacting businesses’ distribution and supply chains, and widening the categories of organisations which may be caught be the product liability directive.

• Definition of Defectiveness: the Directive amends and updates the existing definition of defect to account for the changes to the scope of the legislation from a product perspective, particularly in relation to software. The revised definition includes the effect on the product of its ability to continue to learn or acquire new features after it is placed on the market or put into service, the interoperability of the product, whether the product has been recalled, and the ability of the product to meet the specific needs of a group of users for whom the product was intended.

What steps should you take?

Businesses should assess whether the Product Liability Directive applies to them, and, if so, what level of the supply chain they operate at to determine the scope of their obligations. As part of the review, businesses should:

• Review Product Safety and Compliance: Conduct a thorough review of all products, including digital offerings, to assess whether the products are in scope of the Directive and ensure they meet safety standards and regulations including risks associated with product use.

• Review Contractual Relationships: Businesses exporting to EU entities should review the contractual relationships they have in place to ensure that the liability position is clear and reflects the changes introduced by the Directive.

• Update Terms and Conditions: Businesses should revise terms and conditions to align with the new liability standards and clarify responsibilities regarding product safety, including reviewing any warranties and guarantees.

• Enhance Risk Management: Implement robust risk assessment and management practices to identify and mitigate potential defects in products and services.

• Consumer Communication: Develop clear communication strategies to inform consumers about product safety, usage instructions, and recall procedures.

• Training and Awareness: Ensure that all employees involved in product development, marketing, and customer service are trained on the new compliance requirements and liability implications.

• Monitor Legislative Changes: Stay informed about any further developments in EU product liability legislation and consider seeking legal advice to navigate compliance effectively.

Russian Sanctions

From 31 October 2024, the UK Government is removing the Russian sanctions licensing consideration which relates to the provision of professional and business services from UK parent companies and their UK subsidiaries to their Russian subsidiaries. Licence applications submitted before 31 October 2024 will not be affected by the change.

How could it impact your business?

This change signals a move by the UK Government to further narrow the support that can be provided to Russian businesses and is part of a broader trend to increasingly limit UK involvement in the Russian economy.

Pursuant to the Russian Regulations, UK persons are prohibited from directly or indirectly, providing certain professional and business services (for example, accounting, auditing, business and management consulting, IT consulting and design and other services) to persons connected with Russia (including companies in Russia). However, to date, the UK Government has indicated in its statutory guidance that when considering whether or not to grant a licence to permit such services (were available) it would take into account the UK businesses’ need to provide such services on an intra-company basis. From 31 October, that is changing and the licensing consideration for the provision of intra-corporate services will be removed.

What steps should you take?

UK businesses that currently require a professional and business services licence for services to a Russian group entity will need to carefully consider wider policy reasons in favour of granting their licence application and any other licensing grounds that may be available. There is still discretion to grant licences even where no licensing ground exists but a business would have to explicitly demonstrate how the provision of any ongoing services aligns with the overarching purposes of the sanctions.

Equally this change indicates the UK Government’s current direction of travel in that it is becoming significantly harder for UK businesses that operate internationally to retain a presence in Russia. Many such companies may be taking this as a sign to review their entire business structure.