Since the UK left the European Union (EU) there have been some changes to VAT and Customs rules for businesses trading in goods with, and within, Northern Ireland.
Under the Northern Ireland Protocol (NI Protocol), Northern Ireland (NI) will be treated as part of the UK for VAT purposes. It will also be part of the UK customs territory but EU Customs rules will apply where goods enter the EU via NI.
The key VAT changes are as follows:
Sales from Great Britain (GB) to NI
These will be treated as a normal UK domestic sale, with VAT chargeable at the applicable UK VAT rate. An exception to this is the movement of own goods, where VAT is accounted for on the businesses’ UK VAT return and an equal amount of VAT recoverable.
Movements between NI and EU
Under the NI Protocol, EU VAT rules will apply for the trade of goods within NI, and between NI and the EU. The movement of goods between NI and the EU will follow EU VAT legislation, and such movements will be treated as zero rated dispatches and acquisitions.
XI VAT Number
Businesses will need to notify HMRC of their trade within NI, and obtain an XI prefix VAT registration. The XI prefix is added to the businesses’GB VAT registration number (it is not a new or separate registration). The XI prefix enables the VTA number to be recognised as an EU VAT number.
In addition, where businesses are involved in the movement of goods between NI and the EU, they must ensure to meet the intra-EU VAT reporting obligations including EC Sales lists and Intrastat declarations.
As mentioned above, for Customs purposes, NI will be treated as though it is part of the EU Customs Union. The key Customs changes are as follows:
Movements between GB and NI
No Customs Duty will be applied, provided the goods are not considered to be ‘at risk’ of entering into the EU. Businesses must take steps to declare their goods coming into NI not ‘at risk’.
At Risk Goods
Goods are automatically treated as not at risk where the EU tariff applicable is zero for example where the UK origin rules are met. In the event that the EU tariff is not zero, businesses will be required to obtain authorisation from HMRC for the UK trader schemed which enables them to declare their goods as not ‘at risk’.
Trader Support Service
HMRC offer the Trader Support Service which is a free of charge service that offers guidance for traders in regards to the Brexit changes. The service can assist businesses in obtaining authorisation for the UK Trader Scheme and also has the facility to complete import declarations on behalf of the business.
XI EORI Number
Where businesses are required to complete an import declaration in NI, they must first obtain an XI EORI number. This is identical to the businesses GB EORI, but with a different prefix.
Businesses may be able to obtain a wavier from Customs duty for goods brought into NI from GB where such goods are considered ‘at risk’. The wavier is claimed when the import declaration is submitted, and is provided in the form of de minimis aid.The maximum amount of de minimis aid a business is entitled to claim is €200,000 over 3 tax years. The majority of businesses are able to take advantage of the wavier except for businesses involved in the agricultural primary production sector or the fisheries and aquaculture sector.
Reimbursement Scheme There is also the possibility of a reimbursement scheme for ‘at risk’ goods with EU Customs duty paid that can subsequently be proven to have remained in NI. However, although this has been stated in the UK Government’s NI Protocol Command Paper, specific details of such a scheme have not been released as of yet.
For any queries on the NI Protocol, and to be kept updated on further changes, please get in touch.
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