The lack of agreement on data flows in a no-deal Brexit is a "significant" concern and possible solutions are "burdensome and costly" to already underprepared businesses, MPs have said.
The comments were made in a report issued by the Commons Exiting the EU Committee in response to UK prime minister Theresa May's historic loss in Parliament earlier this month, when the majority of MPs voted against the deal she had drawn up with the European Union.
Solutions may be possible but they will be burdensome and costly compared to the current position and will have a significant... impact on the competitiveness of UK businesses involved
It comes at the start of another crucial week, as the struggle between government and Parliament continues, with opposition MPs focused on forcing a delay to Brexit – currently scheduled for 23:00 GMT, 29 March 2019 – if a deal cannot be struck.
The committee is putting its weight behind those pushing for the "no deal" option to be taken off the table, concluding that the government's so-called "managed" no deal "cannot seriously constitute the policy of any responsible government".
The MPs said they were "deeply concerned" about businesses' readiness for a no-deal Brexit, criticising the government's initial lack of transparency and delays in publishing technical notices on plans.
"Brexit was always going to lead to change for business with a range of new challenges but also opportunities," the report said. "However, businesses have had no certainty about what to prepare for and, in the event of a no-deal exit would face an abrupt change in trading circumstances which would represent a cliff edge for many."
Moreover, it said "belated efforts" to engage with businesses – in the form of technical notices and direct communications – are based on "assumptions about how the EU might respond in a no-deal scenario which could turn out to be unjustified".
Difficulties and delays in discussions with businesses have been well documented throughout the negotiations. Even as late as October, HMRC was reprimanded for failing to properly prepare businesses for the changes in its systems.
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The committee's report details a range of areas where there are problems brewing, but said that data flows after Brexit were a particular concern.
The UK government wants an adequacy agreement with the EU after Brexit, but the EU has been clear that this won't be considered until the UK leaves the bloc.
With a Withdrawal Agreement in place, talks would start during the implementation period when flows would be able to carry on as before – but without a deal, transfers would have to cease, or carry on under new terms.
"Without either a comprehensive agreement or an adequacy decision from the Commission, it will be illegal to transfer personal data from the EU to the UK without separate contractual arrangements," the committee said.
These alternatives are "cumbersome, time consuming and would place a bureaucratic burden on individual businesses".
Although lawyers have told El Reg that in practice making variations to contracts should be "straightforward", the MPs emphasised that making changes would be one extra task for businesses that are already under pressure.
"Solutions may be possible but they will be burdensome and costly compared to the current position and will have a significant, as the government has acknowledged, impact on the competitiveness of UK businesses involved," the report said.
Elsewhere, the MPs warned of a lack of awareness among businesses – something the government also seems painfully aware of, as it today issued a press release urging businesses to make arrangements for data flows in the event of a no-deal Brexit. That followed a "myth-busting" blog from Information Commissioner Elizabeth Denham on Friday.
The committee also noted that the no-deal technical notices – published in September – "place significant weight on assumptions about how the EU will respond in the event of no deal".
However, it said that witnesses were of the opinion that "the scope for side deals will be quite limited" and require "the maintenance of a degree of goodwill between both sides".
But that, it pointed out, will rely on some settlement of financial obligations, a good deal for EU citizens and an indication of how it will deal with the Irish border issue – none of which have been plain sailing to date. ®