Scotland the Brave? An Overview of the Impact of Scottish Independence on Business

The practical issues that arise on separating Scotland from rUK cannot be underestimated, despite the existence of a Scottish Government since devolution. Everything run on a UK-wide basis must be split. Laws that are in force in Scotland and in rUK on independence day will continue in force, but both countries need to look at their statute books in order to ensure that they meet the requirements of each country's new or revised form

• • Scotland is likely to require Westminster legislation to hold a valid referendum, which may come down to politics, rather than law. The SNP wants a referendum in 2023 and, if successful, is then likely to want independence before the next Scottish elections in 2026.
• • An independent Scotland would be a new player on the international stage. A conundrum is how Scotland can enter into agreements with other states before it has legal status in public international law as an independent nation.
• • Scotland will inherit a complete legal framework, but will need to amend its laws in the same way that the UK did (and continues to do) as a result of Brexit, as well as establishing regulators and such like to take the place of UK-wide ones.
• • Scotland will need to establish citizenship rules, and rUK will have to consider which of those who obtain, or can obtain, Scottish citizenship should be able also to hold rUK citizenship. The SNP wants a common travel area with the UK, but that might be difficult if and when Scotland joins the EU.
• • Scottish companies will continue to be recognised, but legislation may be needed to allow companies on one side or other of the border to migrate, should they wish to do so, to the other side.
• • The UK's assets and liabilities will need to be divided between Scotland and rUK. rUK would likely retain the whole of the UK's current national debt, but receive an IOU from Scotland in respect its proportionate share of that debt. Scotland's largest creditor would, initially at least, be rUK.
• • Currency is perhaps the most difficult issue that would face a newly independent Scotland. A Commission established by the SNP recommended the continued use of sterling for an extended period, but an SNP conference rejected that in favour of preparing immediately after any independence vote for a currency of its own.
• • Contracts with Scottish parties will likely continue as before, but there may be, for example, currency risks if a contract requires payment in Scotland.
• • For tax purposes, Scotland will need to enter into double taxation treaties with other states, including rUK, to prevent multiple taxes. There is a possibility of competition in tax rates between Scotland and rUK and other states.
• • Pension schemes that use Scottish limited partnerships may need to restructure. Schemes with Scottish members may also need to ensure that assets and obligations are matched if Scotland adopts a new currency.
• • At independence, Scotland may face its own hard Brexit unless it is able to assume the rights and obligations of the UK under the Trade and Cooperation Agreement between the UK and the EU. Longer term, the SNP wants Scotland to join the EU, which could lead to a hard border – for goods, services and people – between rUK and Scotland in order to protect the EU's single market.
• • Scotland would need to establish its own financial services regulator, and rUK and Scotland would need to decide how to treat firms providing cross-border services, whether through mutual recognition or otherwise (though