In this blog, our Causeway corporate members RSM Tax & Accounting Limited, offers guidance on the steps you can take now in your business in preparing for Brexit. RSM’s Jim Burberry outlines the VAT and customs duty considerations of the Northern Ireland Protocol and how RSM can help.
From 1 January 2021, the flow of goods between Northern Ireland and the Republic of Ireland, or between Northern Ireland and Great Britain will subject to a separate protocol – the Northern Ireland Protocol – which still has its own matters to be finalised.
The special rules for these supply routes will seek to ensure there is a single market on the island of Ireland, whilst protecting the border of the wider EU sin market and also ensuring that there is “unfettered” access to trade between Northern Ireland and Great Britain. To achieve this, customs declarations will be needed for some movements of goods between Northern Ireland and Great Britain and a duty tariff may be applicable to goods arriving in Norther Ireland from Great Britain which are deemed “at risk” of moving into the Republic of Ireland.
HM Revenue and Customs has now written to VAT-registered businesses in Northern Ireland highlighting actions they need to take to prepare for new processes for moving goods under the Northern Ireland Protocol from 1 January 2021.
There are two letters, one for Northern Irish businesses that trade with the European Union and the rest of the world and another for those who do not, but who do move goods between Great Britain and Northern Ireland.
The letters encourage both types of Northern Irish businesses to sign up for the Trader Support Service (TSS), which is free.
How will the Trader Support Service help my Northern Ireland business deal with Brexit?
Clients have asked us, "How will the Trader Support Service help my Northern Ireland business deal with Brexit?”. The UK government says TSS will allow Northern Irish businesses to submit limited information on movements of goods moving between Great Britain and Northern Ireland, or imports into Northern Ireland from outside the UK, instead of having to use the full customs systems.
The UK government says there will be a digital service to support declarations and a contact centre staffed by trade experts, but we don’t have the full picture of how that will work just yet. The service will also provide information to Northern Ireland businesses on how to prepare. The UK government has set itself a stiff task to get the system up and running on time, but we would strongly recommend that all Northern Ireland businesses register for TSS to get whatever help they can from it.
In passing, we at RSM, as you’d expect, have been pouring over the practical aspects of the Northern Ireland Protocol and found that there is a lack of consistency between the intended implementation of the Protocol by both the EU and UK. For example, the EU’s position is that goods moving between Great Britain and Northern Ireland are imports or exports, which normally require customs declarations and would be a UK VAT zero-rated sale and subject to import VAT where delivered.
The UK’s position is that Northern Ireland is part of the UK’s VAT system which brings the expectation that goods moving between Great Britain and Northern Ireland are domestic UK sales for VAT purposes. This leaves questions over how goods moving between Great Britain and Northern Ireland will be accounted for in practice on the VAT returns for Great Britain and Northern Ireland businesses.
This needs to be agreed by the EU/UK joint committee and then clear guidance published by the UK Government and/or HMRC so that Great Britain and Northern Ireland businesses can train their staff and update finance systems before 1 January 2021.
If you would like to find out more about RSM’s practical approach to preparing for Brexit, we are running an online Brexit presentation with Jim and his colleagues from the UK and Ireland at 4pm on Tuesday 27 October - REGISTER HERE >
Read Jim Burberry's previous blog (6 October) on the steps you can take now in your business in preparing for Brexit here >