On 30 September 2024, the UK Government issued a notice stating that from 31 October 2024, the provision of intra-group services will no longer be a specific licensing ground available in relation to professional and business services provided by UK companies to their Russian subsidiaries. Licence applications submitted before 31 October 2024 will not be affected by the change.
Under Regulation 54C of The Russia (Sanctions) (EU Exit) Regulations 2019 (āUK Russia Regulationsā), it is prohibited to, directly or indirectly, provide certain professional and business services (e.g. accounting, auditing, business and management consulting, and various other services) to persons connected with Russia (including entities or bodies in Russia). However, as detailed in the UK Governmentās statutory guidance, a series of licensing grounds are available, under which the UK Government may grant a licence to permit provision of such professional and business services. From 31 October, the licensing ground for services provided by a UK parent company, or UK subsidiary of that parent company, to a Russian entity within the corporate group, will be removed. This change signals a move by 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.
UK businesses that require a professional and business services licence for services to a Russian group entity will need to carefully consider any wider policy reasons in favour of granting their licence application and any other licensing grounds that may be available. As per Regulation 65 of the UK Russia Regulations, the Secretary of State maintains the discretion to grant licences even where no licensing ground exists.
Please note that from 10 October 2024, the Office of Trade Sanctions Implementation (OTSI) will take on responsibility for issuing licences for professional and business services. For further details on OTSIās newly announced civil enforcement powers, please see our recent blog here.