The Taxation Cross-border Trade (Northern Ireland) (EU Exit) (Amendment) Regulations 2021
Published 21 April 2021
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Who is likely to be affected
Businesses and other persons that move goods between Northern Ireland and Great Britain (England, Scotland and Wales).
General description of the measure
The measure removes the potential for a Customs Duty and VAT charge where certain UK goods return to Great Britain after a temporary period in Northern Ireland.
Policy objective
To recognise the position of Northern Ireland within the customs territory of the UK by removing potential for Customs Duty charges and customs requirements and relieving the VAT charge for certain internal UK movements of goods.
Background to the measure
In the command paper ‘The Northern Ireland Protocol’ (published 10 December 2020), the government reiterated that internal UK trade should remain tariff-free and that checks and controls would be avoided as far as possible, to protect trade within the UK.
Detailed proposal
Operative date
22 April 2021.
Current law
The Taxation (Cross-border Trade) Act 2018 (TCTA) establishes the framework for a UK Customs Duty regime. This operates alongside other UK customs legislation, such as the Customs and Excise Management Act 1979.
The Taxation (Post-transition Period) Act 2020 amended TCTA to introduce a customs duty charge (at section 30C TCTA) for goods removed to Great Britain from Northern Ireland that are not ‘qualifying Northern Ireland goods’.
Section 30C of TCTA also enables the Treasury to provide by regulations that this Customs Duty charge, and relevant import duty provisions made under TCTA, do not apply to goods of a specified description.
Paragraph 6(1) of Schedule 9ZB to the Value Added Tax Act 1994 (VATA) provides a VAT relief for qualifying Northern Ireland goods.
Section 37 of the VATA enables the Commissioners of HMRC to provide for relief of VAT chargeable on importation.
Proposed revisions
The measure provides that the charge for goods removed to Great Britain from Northern Ireland at section 30C of TCTA will not apply in relation to certain UK goods returning to Great Britain after a temporary period in Northern Ireland. This ensures that there will be no Customs Duty chargeable (and in most cases no customs formalities applicable) when these goods return to Great Britain.
The measure introduces a corresponding VAT relief.
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 |
The final costing will be subject to scrutiny by the Office for Budget Responsibility and will be set out at the next fiscal event.
Economic impact
This measure is not expected to have any significant economic impacts as it corrects an earlier legislative omission and reflects the government’s long-stated policy that tariffs should not apply on goods movements within the UK customs territory.
Impact on individuals, households and families
The measure does not introduce any requirement for individuals. There is not expected to be any impact on family formation, stability or breakdown.
Equalities impacts
It is not anticipated that there will be any impacts on groups with protected characteristics.
Impact on business including civil society organisations
The changes in this measure will allow businesses and civil society organisations to continue trading and moving goods temporarily into Northern Ireland without additional customs tariffs and VAT costs. There are not expected to be any continuing costs.
This measure is expected overall to have no impact on businesses experience of dealing with HMRC as the changes made in the measure are positive for businesses.
Operational impact (£m) (HMRC or other)
There will be no costs to HMRC from this measure.
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 Natalie Burch at the Treasury by email: natalie.burch@hmtreasury.gov.uk or Mark Hazell by email:mark.hazell@hmtreasury.gov.uk.
Declaration
The Right Honourable Jesse Norman MP, Financial 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.