Lets start at the beginning. To teach on a G Reg aircraft the FI must have a UK licence, already stated. To teach for an EASA licence the course must be conducted at an EASA ATO or DTO. The question then is where is the ATO located, unlikely to be a DTO in the UK, but could be an ATO. Don't see that the airspace has any relevance.
Student would need a UK medical to fly G Reg aircraft unless Annex 1.(Art 150)
EASA prof check can be conducted on a G Reg if the Examiner has both UK and EASA qualifications, candidate can only log Dual if they do not hold a UK licence unless Annex 1.