On 21 July 2022, new sanctions cutting off Russia’s access to the UK’s business and management consulting, accounting and PR services came into force.
The UK Government originally announced plans to ban these professional and business services exports on 4 May 2022 as part of a wider tranche of sanctions designed to prevent Russia benefitting from UK sectors critical to the Russian economy.
The new professional and business services sanctions, which are set out in The Russia (Sanctions) (EU Exit) (Amendment) (No. 14) Regulations 2022, prohibit the following services being provided (directly or indirectly) to a person connected with Russia:
- accounting services – including (but not limited to) accounting review, compilation of financial statements and bookkeeping;
- business and management consulting services – including (but not limited to) management auditing, market management, human resources, production management and project management consulting; and/or
- public relations services.
A “person connected with Russia” includes: (i) individuals ordinarily resident in Russia (even if they are temporarily located elsewhere), (ii) individuals located in Russia, (iii) legal entities or bodies incorporated under the law of Russia and (iv) legal entities or bodies domiciled in Russia.
According to the UK Government, 10% of Russian imports in these sectors are from the UK and the new measures are designed to “further ratchet up economic pressure on Putin’s siege economy” in response to Russia’s invasion of Ukraine this year.
The EU introduced similar prohibitions on 3 June 2022, banning direct or indirect provision to Russia of: accounting, auditing, bookkeeping, tax consulting, business management consulting and/or public relations services.
These sanctions are subject to the existing exceptions in Part 7 of The Russia (Sanctions) (EU Exit) Regulations 2019 as well as new exceptions for professional and business services. There is also a new defence relating to professional and business services specifically – a person who contravenes the prohibitions has a defence if they can show they did not know or have reasonable cause to suspect that the person to whom the services were provided was connected with Russia.
This latest series of UK sanctions also introduces other trade restrictions. For example, there are now prohibitions on: (i) import, acquisition and supply or delivery of Russian gold, coal and oil and (ii) export, supply or delivery of energy-related goods or associated services to Russia or persons connected with Russia.