- NI companies continue to follow EU rules on the movement of goods.
- There are no new regulatory checks, no change at the border, no new paperwork and no tariffs in respect of trade in goods between NI and EU member states.
- NI businesses have unfettered access to the GB market in respect of qualifying goods.
- The UK Government’s Command Paper ensures that for “qualifying goods” (which at present means goods in free circulation in NI but expected to be tightened in 2022 to mean goods of NI origin) there are no declarations, tariffs, new regulatory checks or customs checks, or additional approvals for Northern Ireland goods to be placed on the UK market.
- Whilst there are a number of benefits for NI businesses arising from the Protocol, the Protocol also means that goods, such as food and animal products, arriving in NI from GB are now subject to a range of new controls and checks, such as the requirement for an Export Health Certificate and pre-notification on the EU’s TRACES-NT database. NI businesses should be aware that at the time of writing “standstill” arrangements are in place, which provide for the extension of grace periods and easements for traders moving goods from GB to NI. As such, full post-Brexit checks on goods crossing from GB to NI have not yet been fully implemented
- The movement of goods from GB into NI is now treated as an import into the EU and digital import declarations are now required regardless if no tariffs apply. Once goods are cleared through the import process they are then in free circulation in the EU.
- NI businesses should be aware that under the Common Travel Area (CTA) Irish and British citizens will continue to be able to move freely and reside in either jurisdiction and enjoy associated rights and entitlements including access to employment, healthcare, education and social benefits etc.
- However, NI traders should also be aware that from 1 January 2021, non-British, non-Irish workers who wish to begin employment in the UK while remaining outside the UK will need to apply through the UK’s points-based immigration system. As such, if NI businesses wish to hire foreign nationals in the future (EU and non-EU, excluding Irish nationals), you will be required to apply for a sponsorship license from the Home Office.
What does the NI Protocol mean for NI businesses?
How will the provisions of the UK- EU Trade and Cooperation Agreement impact NI tourism & hospitality businesses?
- As of 11pm on 31 December 2020, the transition period ended and the UK entered into a new trading relationship with the EU, under the EU‐UK Trade and Cooperation Agreement (TCA), The TCA contains a number of important provisions that will impact NI tourism & hospitality businesses and the tariffs that they pay on the movement of goods between NI/ EU and GB;
- The Trade and Cooperation Agreement (TCA), allows businesses to benefit from preferential rules (i.e. no tariffs or quotas), on the movement of goods of UK origin when moving to the EU/NI or EU origin when moving to GB. Goods that are not deemed to have originated in the UK, when moving from GB to NI, can still be traded but they will not be entitled to benefit from preference under the TCA and other options, such as the UK Trader Scheme or the opportunity to waive tariffs, need to be considered if any applicable tariffs are to be avoided;
- Under the TCA, a product will be considered “originating” if It is “wholly obtained” in the EU/ UK, it is produced in the EU/ UK exclusively from originating materials, or it has been substantially transformed in line with the relevant Product‐Specific Rule included in the TCA. The TCA also contains detailed rules around what constitutes sufficient processing to change the origin of a good.
How can I satisfy new customs obligations?
- The UK Government’s Trader Support Service (TSS) can assist with completion and submission of customs declarations, free of charge, for the movement of goods such as those required when moving goods from GB to NI;
- For businesses who don’t have the capacity to complete customs formalities in house via the TSS, external customs agents can be used, at a cost.
- Any company who now has additional customs obligations from 1 January 2021 should ensure that they have applied for an EORI number. NI companies should ensure that they have an XI EORI number in place;
- If using a customs agent, traders also need to ensure that their customs agent is aware of any authorisations being availed of to mitigate tariffs, to include UK Trader Scheme (further information included below), waiver scheme or preferential tariffs under the EU‐UK TCA otherwise EU tariffs could apply on the movements from GB to NI.
What is the UK Trader Scheme?
- The UK Trader Scheme allows authorised businesses to undertake that the goods they are moving to NI from GB are “not a risk” of onward movement to the EU and therefore not liable to EU tariffs;
- To be eligible for the scheme, certain criteria applies to include being established in NI, or in some instances in the rest of UK if fixed business premises are located in NI. The scheme will not be available to businesses with serious criminal records or existing compliance issues;
- It will be important for businesses in the tourism and hospitality sector in NI, who wish to continue or are reliant on purchasing goods from GB, to ensure that they get the correct assistance to confirm, if eligible, they are authorised to use the new scheme, thereby avoiding having to pay
duties and subsequently reclaim.
Will any specific products result in additional customs formalities or checks at the GB-NI border?
- The movement of goods from GB-NI for products such as goods of animal and plant origin are now subject to additional checks and controls. Once these goods are cleared through the import process, they are then in free circulation within the EU;
- There is a need for export health certificates and SPS checks (sanitary and phytosanitary checks etc.) for items of animal and plant origin;
- The UK government have introduced a Movement Assistance Scheme for agri-food traders, which removes the need for traders to pay certification costs and will reimburse the costs incurred by those certifying the products up to a set amount. This scheme has also now been expanded to cover traders moving organic products to Northern Ireland. Following six months of operation and the completion of a recent review, it was decided that the Movement Assistance Scheme (MAS) would continue to provide traders with advice and guidance via the dedicated MAS helpline (0330 0416 580) and financial support for certain certification costs (e.g., phytosanitary certificates, certificates of inspection, export health certificates etc.) until the end of December 2023, when the scheme will close. From 1 July 2021, MAS is providing additional support with the cost of certification requirements under the NI Protocol to include audit inspection costs incurred to register with PHEATS (Plant Health Exports Audited Trader Scheme) and ongoing audit costs for the movement of fruit, vegetables and cut flowers from GB to NI.
- It is hoped that this will help mitigate price hikes. There are also easements in place in relation to SPS rules. However,
these easements are only available to authorised traders who are identified by DAERA. Paperwork, albeit more simplified, is still be required. The simplifications, which mean that authorised traders can move products of animal origin, composite products and plant products from GB to NI without the need for official certification, has been extended until further notice.
What type of information do I need to know in order to complete a customs declaration?
Information will vary depending on the nature of the goods and the transaction, however, required information includes:
- Suppliers name, VAT no., EORI no. and address;
- Importer’s name, VAT no., EORI no. and address;
- Goods description;
- Commodity codes (supplier may be able to assist with this information);
- Weight of goods;
- Country of origin.
A lot of the commentary around Brexit appears to relate to the movement of goods. Are there any issues for services companies?
- Yes, whilst services companies are not impacted by additional customs obligations there are a number of potential issues for services companies particularly around the VAT implications of cross-border trade; and the eligibility of non-UK and non-Irish citizens to continue to work in the UK;
- Where traders believe they may have an exposure in respect of any of these issues additional advice should be sought.
Will Brexit impact the availability of employees?
- The Common Travel Area (CTA) Agreement between the UK and Ireland ensures that UK and Irish citizens have the right to live and work in the UK post December 2020.
- In respect of Non-UK / Non-Irish citizens who lived and worked in the UK prior to 31 December 2020, they were offered the opportunity, pre 30 June 2021, to apply for settled status under the EU Settlement Scheme in order to ensure that they remained eligible to work in the UK from 1 January 2021.
- For those not resident in the UK prior to 31 December 2020, and therefore not eligible to apply under the EU settlement scheme, a new immigration points-based system was introduced where employers wish to sponsor a non-UK and non-Irish citizen.
Will postponed VAT accounting be of benefit to my business?
- Prior to Brexit import VAT was payable at the point of entry to the EU. VAT could then be reclaimed (subject to the recoverability rules) when filing the VAT return which had the potential to create a cashflow challenge;
- With Postponed VAT Accounting, import VAT can be paid and reclaimed on the VAT return in the period that the import takes place, with potential major cashflow benefits for businesses;
- No prior authorisation is required in order to operate Postponed VAT Accounting; however, a specific code needs to be included on the import declaration
Does the Trade and Cooperation Agreement between EU and UK provide for the transfer of data between EU and UK post Brexit?
- The European Union (EU) adopted ‘adequacy’ decisions allowing the continued seamless flow of personal data from the EU to the UK.
- The decision mean that UK businesses and organisations can continue to receive personal data from the EU and EEA without having to put additional arrangements in place with European counterparts.
What is the VAT treatment of trade between NI and ROI post Brexit?
- Supply of goods to VAT registered business customers: - This will continue to be subject to the intra community supply provisions. As was the case prior to Brexit, subject to conditions, the VAT registered business customer will be entitled to self-account for the VAT arising;
- Supply of goods to non-VAT registered private consumers: - NI companies need to be aware of the EU VAT e-commerce reform which was introduced in July 2021. Where sales do not exceed a threshold of €10,000/ £8,818 then UK VAT ought to continue to be applied. Where this threshold is exceeded then VAT ought to be applied in the EU member state to which the goods are supplied. For businesses supplying goods to multiple EU member states, the One Stop Shop should be considered to avoid VAT registration requirements in multiple EU member states.
- Supply of services to VAT registered business customers: - As was the case prior to Brexit, the place of supply will continue to be the place where the business customer is established. The VAT registered business customer will continue to be entitled to self-account for the VAT arising;
- Supply of services to non-VAT registered private consumers: - Guidance currently indicates that the place of supply will continue to be the place where the supplier belongs. This means that where a UK based trader providers general rule services to VAT unregistered clients in ROI, UK VAT ought to be applied. It is important to note that this is a general rule, there are a number of exceptions to the general rules and the appropriate VAT rules can vary depending on the nature of the transaction. As such it is important to review the appropriate VAT treatment on a transaction by transaction basis.
What is the VAT treatment of seasonal events such as Halloween events and Santa trails?
- There is an exception to the general place of supply rules for services that relate to an event or physical performance. An event is characterised by HMRC as a gathering of people to watch or take part in an activity for a short or limited time rather than an ongoing basis. These services are often deemed to be supplied “where performed.” There are separate rules for B2B and B2C supplies;
- B2B: Only the charge for the admission to an event, and any services ancillary to admission (such as charges for the use of the cloakroom or sanitary facilities), are taxed at the place where the event takes place. All other B2B services relating to the event are determined under the
general B2B rules (i.e., place of supply is the place where the business customer belongs);
- B2C: The scope of supplies taxed where performed is far wider and includes services relating to cultural, artistic, sporting, scientific, educational, entertainment and similar activities. HMRC indicate that supplies that are taxed where performed include “party planning that includes attendance at the event.” This is not limited to the supply of admission as it is for B2B services;
- Where the above rules apply and the event takes place in NI, UK VAT ought to be applied to the sale of tickets for admission to the event.
If you are shipping pop ups etc for promotional shows do you need an ATA carnet?
- If moving goods from NI to GB on a temporary basis, an ATA Carnet can be used to replace the need for customs documentation on return to NI.
- An ATA Carnet removes the need to pay duty and/or vat at the time of import and thus facilitates efficient import.
- Typically, ATA Carnets are used for the temporary movement of:
o Commercial samples
o Goods used at trade fairs, exhibitions, shows or similar events
o Professional equipment
- Businesses should be aware that guidance from the Northern Ireland Chamber of Commerce indicates that ATA Carnets are not available in respect of “goods to be sold or hired out abroad for financial gain.”
- Although expensive, there are a number of potential benefits associated with use of an ATA carnet:
- The carnet would simplify clearing your goods through customs in exporting and importing countries - it replaces customs documents that you’d normally need to complete;
- The carnet would give financial security for customs charges that could be due on goods that you’ll use in the countries to which the goods are imported;
- The carnet would remove the need for a customs declaration.
- Once the ATA Carnet has been granted, Businesses will be required to show the carnet to customs each time they import or export the relevant goods. The carnet may need to be presented each time the business transports the relevant goods between GB and NI. The carnet will be valid for up to 1 year from the date of issue.
- When applying for an ATA Carnet it is recommended that the company provides accurate descriptions of the goods (e.g., including photographs of the items). Other information required as part of the application process are: Details of the Carnet holder, details of the person(s) who will be travelling with the goods, intended use of the goods, and list of goods taken. All the goods must be individually itemised with each item having its specific description (i.e., make, serial number), weight and value to facilitate Customs identification and prevent substitution of goods.
- Applications for an ATA carnet are submitted online.
Will tourists buying goods, including alcohol and tobacco, and then moving on to GB or RoI require additional documentation or restricted in the value of goods they can carry home?
In respect of the movement of goods from NI to RoI there will be no new restrictions or paperwork required.
In respect of passenger purchase of alcohol and tobacco, the UK House of Commons published a briefing paper outlining that after the UK leaves the Single Market, passengers entering GB from EU and non-EU countries from 1 January 2021 will be entitled to bring in defined amounts of alcohol, tobacco and other goods, without having to pay UK VAT or duty on these imports.
These personal allowances will be as follows:
|Alcohol||Tobacco||Any other goods|
At present I provide online services to customers in the EU and outside of the EU, are there any changes arising from Brexit/ what are the requirements for shipping online sales outside the UK?
Online sales to customers in the EU:
- Customs - No additional customs formalities will apply on the movement of goods between NI and EU member states. There will be no new paperwork, no tariffs and no additional regulatory checks,
- VAT: The rules introduced under the EU’s July 2021 e-commerce reform will apply. Where the annual value of sales does not exceed €10,000/ £8,818 then UK VAT ought to continue to be applied. Where this threshold is exceeded then VAT ought to be applied in the EU member state to which the goods are supplied. If VAT in another EU member state is to be applied the company has the option of: a) Registering for VAT in each EU member state to which goods are being supplied; b) Filing quarterly EU-wide VAT returns via the One Stop Shop.
Online sales to customers outside the EU:
- These will continue to be treated as exports and imports for both VAT and customs purposes, as was the case prior to Brexit.
Will NI be able to have different VAT or tax rates from other EU states and GB?
- NI will remain part of the UK VAT regime, however, in relation to VAT rates NI remains bound by EU rules which provide a good deal of flexibility already.
- There is a specific provision in the Protocol which allows the UK government to apply NI VAT exemptions and reductions including zero rating.
- As such, if reduced rates of VAT were to be introduced by the UK government in the future it islikely that these would be applied to NI in the same way in which they would be applied throughout the remainder of the UK.
If you source hotel supplies from a company in England, because the options are limited here. Do we need an EORI number for this?
- From 1 January 2021, the movement of goods GB- NI will be treated as an import into the EU and full import customs declarations will be required.
- An EORI Number will be required in order to make the relevant customs declarations.
- Northern Ireland’s unique position under the Protocol is recognised through their XI EORI number, however, an XI EORI number can only be obtained if you already have a GB EORI Number in place.
- If you have not yet obtained an EORI Number, you can apply for a GB EORI number and an EORI number that starts with XI at the same time.
Regarding the TOMS Scheme, if you have a turnover of £110K, but your outsourced and relevant reseller fees are £50K, would this would mean that you are under the VAT threshold for VAT registration / charging VAT?
- Under TOMS, if you’re considering whether you must register for VAT or whether you must deregister, your taxable turnover is regarded as the total of.
- Total margin on your taxable (including zero-rated) margin scheme supplies. This will include thefull value of taxable (including zero-rated) in-house supplies, taxable agency commission and any other taxable (zero-rated) supplies you make in the UK.
- As such, your turnover under TOMS for registration purposes in the above example would be £60k.
*There was a subsequent question received: Specific to the TOMS Scheme: Are we correct in understanding that a company only needs to register for VAT once their turnover less their payments to relevant sub-contractors exceeds £85K?
- As outlined above, when considering turnover for VAT registration purposes, it is the tour operator’s margin that needs to be considered.
If you run a small online shop do you need to fill out customs materials or does royal mail cover this?
Where you have identified that additional customs obligations arise, and the Incoterms dictate that customs are your responsibility, you will be held liable for any unpaid duties or failure to satisfy customs obligations. Therefore it is essential that you ensure all customs obligations are satisfied- either in house, through engaging with a customs agent or utilisation of the Trader Support Scheme (TSS). Royal Mail will not automatically carry out customs formalities on your behalf.
Will there be any restrictions on tourists travelling from the EU to the NI and if so will tour operators be aware of these?
EU, EEA and Swiss citizens will continue to be able to travel to the UK for holidays or short trips without needing a visa. They will be able to cross the UK border using a valid passport which should be valid for the whole time you are in the UK. There are currently no border checks travelling from ROI into NI but the advice is for travellers to have travel documents and identity documents available for inspection. Tour operators should make their customers aware of this before booking tours.
Will the ability for students to come over in exchange schemes to work or get experience be affected?
Assuming this is a question about whether the temporary work visa under tier 5 remains the same, the answer is yes. There may be a new application form but the process seems to be the same.