Policy paper

The Excise Duties (Northern Ireland etc. miscellaneous modifications and amendments) (EU Exit) Regulations 2022

Published 17 March 2022

Who is likely to be affected

Businesses moving excise goods between the island of Ireland (Ireland or Northern Ireland) and Great Britain (England, Scotland and Wales), and from the Isle of Man to Northern Ireland.

General description of the measure

This measure makes three changes to secondary legislation governing the movement of excise goods. It:

• introduces a simplified model for persons (including businesses) moving excise goods from Great Britain or the Isle of Man to Northern Ireland
  
• extends the excise duty offset mechanism to movements from the Isle of Man to Northern Ireland
  
• provides for continued alignment of the excise duty suspension processes with the temporary staged customs controls for goods moving from the island of Ireland to Great Britain

Policy objective

All changes in this measure aim to simplify the way the excise regime relating to Northern Ireland operates.

The measure will simplify the calculation and accounting process for additional excise duty on the movement of goods to Northern Ireland from Great Britain or Isle of Man where the excise duty offset mechanism is applied. This will reduce the administrative burden for persons where excise duty is payable on entry into Northern Ireland, after the previously paid excise duty is offset against the new charge.

The measure will extend the scope of the offset mechanism to excise movements from the Isle of Man to Northern Ireland.

The measure will also ensure the continued alignment of excise duty suspension processes with the temporary staged customs controls for goods moving from the island of Ireland to Great Britain.

Background to the measure

After 31 December 2020, the implementation of the Northern Ireland Protocol introduced changes to the way the excise regime operates. Where excise goods moved from Great Britain to Northern Ireland are already UK duty-paid, the excise duty offset mechanism was introduced to prevent double taxation without the need for a domestic duty repayment system.

The changes introduced in this measure build upon the existing offset mechanism by simplifying some of the processes, as well as extending its scope, to ensure an equal treatment for excise goods moving to Northern Ireland from both Great Britain and the Isle of Man.

Staged customs controls, which were temporarily introduced from 1 January 2021, continue to be temporarily extended for goods moving from the island of Ireland to Great Britain. This measure aligns the excise duty suspension processes to the staged customs controls arrangements for controlled goods on these routes.

Detailed proposal

Operative date

The measure will take effect from 1 April 2022.

Current law

The excise duty offset mechanism was introduced from 1 January 2021. It works by crediting any amount of UK excise duty that has already been paid on the goods against the liability to pay the charge to excise duty that arises on entry to Northern Ireland. Any duty payable through this mechanism is accounted for through the import declaration made via customs processes. This adds a layer of complexity to the process of calculating any additional excise duty due.

The offset mechanism currently only applies to the movement of excise goods from Great Britain to Northern Ireland. Persons moving goods from the Isle of Man to Northern Ireland are currently not able to make use of the benefits the mechanism provides. This creates a disparity in the treatment of goods moving to Northern Ireland from the Isle of Man, compared to goods moving to Northern Ireland from Great Britain.

From 1 January 2021, the UK introduced temporary staged customs controls for goods arriving in Great Britain from the EU, to give businesses time to adjust to the new customs requirements. These controls provided for a delay to the notification of arrival of controlled goods, such as excise goods in HMRC’s IT systems. These allowed businesses to move goods straight to their premises upon import, without having to stop at the port to complete customs formalities. Staged customs controls for most movements ended as of 1 January 2022, however they continue to be temporarily extended for the movement of controlled goods, from the island of Ireland to Great Britain.

Proposed revisions

The changes introduce a new simplified model for persons moving excise goods to Northern Ireland from Great Britain or Isle of Man, building on the existing excise duty offset mechanism.

The changes will allow HMRC to specify in notices any supporting evidence that may be required to determine whether excise duty is payable, the form and manner of the return used, record keeping requirements and further particulars relating to the timeframe for making returns and making payment.

The changes extend the scope of the excise duty offset mechanism so that it can be applied to the movement of excise goods from the Isle of Man to Northern Ireland.

This measure also makes changes which ensure that excise duty suspended processes continue to be aligned with the temporary staged customs controls arrangements for controlled goods moving from the island of Ireland to Great Britain. Where notification of the arrival of controlled goods can be delayed (up to the end of the next working day after the day on which the goods entered Great Britain) this measure enables the entry of duty suspended goods into the Excise Movement and Control System (EMCS) to be similarly delayed.

Summary of impacts

Exchequer impact (£m)

2021 to 2022	2022 to 2023	2023 to 2024	2024 to 2025	2025 to 2026	2026 to 2027
empty	empty	empty	empty	empty	empty

Costings, where required, will be subject to scrutiny by the Office for Budget Responsibility and included in their forecasts at a future fiscal event.

Economic impact

This measure is not expected to have any significant economic impacts.

Impact on individuals, households and families

There is expected to be no impact on individuals as the measure affects only businesses.

The measure is not expected to impact on family formation, stability or breakdown.

Equalities impacts

It is not anticipated that there will be impacts on groups sharing protected characteristics.

Impact on business including civil society organisations

The measure is expected to have a positive impact on businesses by simplifying the current process for moving excise goods from Great Britain and Isle of Man to Northern Ireland.

The measure is expected to have negligible impact on businesses costs. One off costs will include familiarisation with the rules. There are not expected to be further one off or any continuing costs.

This measure is expected overall to improve businesses’ experience of dealing with HMRC as it will simplify the process for calculating and accounting for any excise duty on the movement of goods from Great Britain and Isle of Man to Northern Ireland.

There is expected to be no impact on civil society organisations. Operational impact (£m) (HMRC or other)

This measure is not expected to have an operational impact upon HMRC or other government departments.

Other impacts

Other impacts have been considered and none have been identified.

Monitoring and evaluation

The measure will be kept under review through communication and ongoing stakeholder engagement with trade bodies and other representative businesses.

Further advice

If you have any questions about this change, please contact Cesar Yanchev at lachezar.yanchev@hmrc.gov.uk.

Declaration

Helen Whately MP, Exchequer Secretary to the Treasury, has read this tax information and impact note and is satisfied that, given the available evidence, it represents a reasonable view of the likely costs, benefits and impacts of the measure.