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VAT and duty update on the Northern Ireland position regarding trading in goods

Northern Irelands position regarding trading in goods

The basics

Under the Northern Ireland Protocol, Northern Ireland will continue to follow EU VAT rules for trading in goods.  The existing rules for intra-community movements of goods will, therefore, continue to apply from 1 January 2021.  However, Northern Ireland is and will remain, part of the UK’s VAT system.

The Protocol will specify where VAT is liable on goods and attempt to minimise any changes to VAT procedures, where goods are moving between Great Britain and Northern Ireland.

It is important for freight forwarders and customs brokers to understand the new rules for movements of goods between Northern Ireland and other territories and new systems in place for assisting with this and making the relevant declarations on behalf of importers.

XI EORI

Businesses that trade with Northern Ireland must obtain a new Northern Ireland EORI, prefixed ‘XI’.  This will enable a business to:

  • Move goods between Northern Ireland and non-EU Member States
  • Make a declaration in Northern Ireland
  • Obtain a customs decision in Northern Ireland
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The ‘XI’ prefixed VAT number must be shown on invoices, statistical reporting filings and customs documents, for transactions where goods are supplied to Northern Ireland by VAT registered EU businesses and where there is a sale or movement of goods from Northern Ireland to the EU. 

HMRC has set up an online Trader Support Service (TSS), in order to assist businesses and forwarders acting on their behalf, in moving goods between Northern Ireland and Great Britain. 

UK Trader Scheme launched

The New UK Trader Scheme (UKTS) is available to help ensure businesses and forwarders acting on their behalf, to not pay tariffs on the movement of goods from Great Britain to Northern Ireland, where the goods are to remain in the UK customs territory.  Businesses can self-declare goods not ‘at risk’ of entering the EU, so they do not become subject to duty.

Treatment of sales and deliveries of goods

Where there is a sale of goods between Great Britain and Northern Ireland, this will continue to be treated as a UK domestic supply and VAT should be charged.  Technically sales from Great Britain to Northern Ireland and vice versa will be treated as imports and exports.

Goods moving between Ireland and Northern Ireland, will continue to be treated as a movement within the EU and will therefore remain as an intra-community zero-rated transaction, subject to the normal rules.

In terms of customs duties, no duty will be due on goods imported into Northern Ireland from the EU, or moved from Great Britain to Northern Ireland, that are not deemed ‘at risk’ of being onward delivered to an EU destination.  Duty will be charged on goods delivered to Northern Ireland from Great Britain that are deemed ‘at risk’ of being onward delivered to the EU, or which are non-domestic goods.

Duty will also apply to goods delivered from Northern Ireland to Great Britain, that are not ‘Qualifying Northern Ireland Goods’, or where they are ‘Qualifying Northern Ireland Goods’, but have been delivered for the purpose of avoiding customs duties.

As is currently the case, imports to Northern Ireland of rest of the world goods, will be subject to duty.

Qualifying Northern Ireland Goods

‘Qualifying Northern Ireland Goods’ are defined as goods which are processed in Northern Ireland using components which are in UK free circulation, or which are located in Northern Ireland and are not subject to any customs supervision, restriction or control.

Movement of goods in general

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The new rules will mean that declarations will be required from businesses moving goods from Great Britain into Northern Ireland, that will include a summary declaration when goods arrive, for all goods sent from Great Britain to Northern Ireland.  Import VAT will apply to goods that enter Northern Ireland from Great Britain, albeit accounted for in the VAT return (see separate article on Postponed Import VAT Accounting).  The same will also broadly apply to goods entering Great Britain from Northern Ireland. 

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