Brexit Bulletin, 6 November 2020

Nov 06, 2020

After two weeks of intensive negotiations between Brussels and London, chief Brexit negotiators from both sides have stated yet again that while some progress has been made, significant divergences remain. The differences between the two sides remain substantial, particularly in relation to the level playing field, governance, and fisheries. Read today’s Brexit Bulletin to find out more. Readers can also view our new guide on “Common Transit Procedures”, and view HMRC’s latest letter on Brexit preparedness to VAT-registered businesses.

At a glance: Common Transit Procedures

Many Irish traders use the UK land-bridge to move goods to the European continent.  And many UK traders use the European continent to export goods to Asia.  After Brexit, this means that, strictly speaking, UK and Irish traders could have to make customs declarations and pay import duties at multiple borders. Common Transit procedures can help with this. Read our new guide to learn more.

 

At a glance: Common Transit Procedures

 

“Some progress made, but serious divergences remain”, state chief Brexit negotiators

After two weeks of intensive negotiations between Brussels and London, chief Brexit negotiators from both sides have stated that some progress has been made, however significant divergences still remain. This news follows reports saying that there was some hope that a deal could be reached in early November. However, it is reported that differences between the two sides remain substantial, particularly in relation to the level playing field, governance, and fisheries. In a short statement on Twitter, chief EU negotiator Michel Barnier confirmed that “very serious divergences” remain. Indicating that there might potentially be no deal by the middle of November, he also stated that the EU is prepared for “all scenarios”. In confirmation, UK’s lead on the negotiations, David Frost, issued a similar statement agreeing with his counterpart. 

Additionally, a potential chink in the UK’s armour has emerged. As of 1 November 2020, the UK is now in breach of its deadline to respond to the EU’s formal notice on legal action for violating the tenets of the Withdrawal Agreement. As the root cause of the issue – UK’s highly contentious Internal Market Bill – continues to be debated in the House of Lords, the European Commission has not yet received a response to the start of infringement proceedings which were launched on 1 October 2020. Spokesperson for the Commission, Daniel Ferrie, has confirmed that they have not received a reply from the UK on their legal notice, following which the Commission is now considering next steps in the process, including issuing a reasoned opinion.

Agreement has been reached in some areas

The fourth meeting of the Ireland/Northern Ireland Specialised Committee was also held on 5 November 2020, co-chaired by officials from the UK Government and the European Commission. A representative from the Northern Ireland Executive also attended as part of the UK delegation.

Key updates are as follows:

  1. An agreement was reached on an approach on a phased process for implementing medicines regulation in Northern Ireland up to 31 December 202
  2. An agreement was reached on the process for identifying Northern Ireland traders for VAT purposes and enabling them to reclaim VAT through existing IT databases when trading in goods with the EU
  3. On transit procedures to be available in Northern Ireland and operate consistently with the Common Transit Convention
  4. On the elements of the Electricity Directive that will not apply in Northern Ireland.

The UK plans to issue guidance in these areas shortly.

UK publishes preparedness guidance for Financial Services sector

The UK has published comprehensive guidance for the end of the transition period from HM Treasury, the Financial Conduct Authority (FCA), the Bank of England (Bank), and the Prudential Regulation Authority (PRA) for consumers and businesses.

The guidance is divided into information for customs, and information for financial services providers. View the guidance on the GOV.UK website.

 

“Act now to avoid disruption”, writes HMRC to VAT-registered businesses

HMRC is writing letters to VAT-registered businesses trading with the EU and/or the rest of the world, highlighting actions they need to take to continue trading with the EU from 1 January 2021. The letters explain what businesses need to do to prepare for new processes for moving goods at the end of the transition period. Also, these actions will not change regardless of the outcome of the Brexit negotiations.

View the letters here

 

UK hauliers: ECMT permit application deadline is 20 November

UK hauliers can apply for a European Conference of Ministers of Transport (ECMT) permit between 2 and midnight on 20 November to ensure that they are able to carry out EU-bound international transportation from 1 January 2021 in all circumstances.

ECMT permits allow drivers to transport most types of goods or drive an empty vehicle through the EU (except Cyprus), Liechtenstein, Norway, Switzerland and the UK to the following 13 countries: Albania, Armenia, Azerbaijan, Belarus, Bosnia and Herzegovina, Georgia, North Macedonia, Moldova, Montenegro, Russia, Serbia, Turkey, and Ukraine.

For more information see GOV.UK.

 

EU issues legal notices to UK on Brexit issues

In its October package of infringement decisions, the European Commission has pursued legal action against the UK for failing to comply with their obligations under EU law. These decisions aim to ensure the proper application of EU law for the benefit of citizens and businesses.

  1. To ensure a comprehensive sickness insurance for EU citizens in UK

    The Commission sent a complementary letter of formal notice to the UK for failing to provide comprehensive sickness insurance for economically inactive (those looking for work) EU citizens when on UK territory. Under the Free Movement Directive, EU citizens who settle in another EU country but do not work in that country are required to have sufficient resources and sickness insurance. The UK’s shortcomings in implementing and transposing the EU free movement law also risks affecting the implementation of the citizens' rights under the Brexit Withdrawal Agreement after the end of the transition period.

     

  2. For failure to comply with EU VAT rules for trade in financial instruments on certain terminal markets

The Commission has issued a legal notice to the UK for not properly applying EU VAT rules for the trade in financial instruments on certain terminal markets and for not enforcing EU Court of Justice judgment on fulfilling obligations under EU VAT rules. The judgement says that the UK failed to fulfil its obligations under EU VAT rules by relaxing VAT rules without seeking EU authorisation. As a result, the relaxation of the rule is incorrectly applied by the UK to trading in commodities other than those originally covered. The UK now has two months to reply to the letter of formal notice.

 

 

 

For all Brexit updates, visit our Brexit webpage.