In this week’s EU Exit Bulletin, read about the free trade agreement reached between the UK and New Zealand, Revenue notices to traders on the impact of EU sanctions placed on Russia, and funding to support businesses in Ireland post-Brexit. We also bring you information about customs research being undertaken by the Department for the Economy and HMRC guidance on Postponed VAT Accounting.
UK and New Zealand sign free trade agreement
After almost two years of negotiations, the UK and New Zealand signed a free trade agreement on 28 February 2022. UK Trade Secretary Anne-Marie Trevelyan and New Zealand’s Trade and Export Growth and Agriculture Minister Damien O’Connor met in London to agree the deal.
Broadly the agreement will eliminate tariffs on UK exports to New Zealand, worth £17 million annually. These tariff reductions include clothing (up to 10 percent), footwear (up to 10 percent), buses (5 percent), ships (up to 5 percent) and bulldozers and excavators (up to 5 percent).
An “environment” chapter is also included, reinforcing the UK’s commitments to the Paris Agreement and efforts to achieve net zero emissions. The agreement encourages trade and investment in low carbon goods, services and technology. In terms of services, British service suppliers should be able to compete in New Zealand on an “equal footing”, while relevant licencing and authorisation procedures will be transparent and straightforward. It is expected that the agreement could increase the gross value added of financial and professional business services sectors by around £105 million (compared to 2019 levels).
Commenting on the agreement, Ms Trevelyan said “This deal will slash red tape, remove all tariffs and make it easier for our services companies to set up and prosper in New Zealand.”
The agreement is not yet in force. Both the UK and New Zealand are required to complete respective domestic procedures for the agreement to come into effect. Once approved by both Parliaments, businesses will be able to trade under its terms.
Read more about the agreement on GOV.UK.
Revenue notice to traders importing goods that have originated in Luhansk or Donetsk
The EU has adopted a package of sanctions (Council Regulation (EU) 2022/263), to respond to the decision by the Russian Federation to recognise the non-government-controlled areas of the Donetsk and Luhansk oblasts of Ukraine as independent entities.
Under this regulation, it is prohibited to import goods originating from these territories into the EU (certain exemptions apply). Additionally, the sale, supply, transfer, or export of specified goods and technology to any natural or legal person, entity or body in the specified territories, or for use in the specified territories is prohibited.
Goods imported from these Donetsk and Luhansk will therefore not be released for free circulation and importers are advised not to attempt to import goods from the affected regions.
Revenue notice to traders exporting to Russia
The EU has also adopted a package of sanctions, Council Regulation (EU) 2022/328, which prohibits the sale, supply, transfer or export, directly or indirectly, to any natural or legal person, entity or body in Russia or for use in Russia of the following:
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Specified goods and technology suited for use in aviation or space industry; and
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the Regulation also extends the existing controls on dual-use goods and technology, as provided for in Council Regulation (EU) 2021/821, to all end users (previously only applied to military end users) in Russia.
The prohibitions will not apply to certain goods for non-military use, including goods for humanitarian purposes. A full list is provided in Revenue’s eCustoms Notification 06/22 which also includes further details about the impact of sanctions on Irish exporters.
€11 million supports announced under EU Brexit fund
The funding is intended to support business recovery and will address several priority areas including digitalisation, innovation, sustainability, and leadership development.
This funding has been provided under the €5.4 billion EU Brexit Adjustment Reserve, of which Ireland is the biggest beneficiary, and will be available to all SMEs nationwide. Businesses are encouraged to join a network relevant to their sector and region to avail of these supports.
Department for the Economy customs research
The Department for the Economy (DfE) is seeking members in practice who would be willing to speak to a researcher on their experience of customs on Great Britain to Northern Ireland movements. The research mainly focuses on intermediaries and is a refresh of previous research conducted by DfE, which at that time demonstrated that there wasn’t adequate capacity in the private sector in NI and provided some of the evidence of the need for Trader Support Service (“TSS”). DfE are also keen to include a number of businesses in this work. Details of those participating will be anonymised in the report.
This could be very vital supporting evidence of the continuing need for the TSS beyond the end of 2022.
In response to the Institute’s letter, which recommended the TSS be put on a permanent basis, HMRC confirmed the future of the TSS, including whether an extension to the current service will be required, will be tailored to reflect the outcomes of the talks on the Protocol, which are currently ongoing.
Revenue and Customs Brief 3 (2022) – postponed accounting for VAT
HMRC recently published Revenue and Customs Brief 3 (2022). This is relevant to businesses registered for the flat rate scheme, accounting for import VAT using postponed VAT accounting. The Brief sets out how to account for these supplies for VAT return periods starting on or after 1 June 2022.
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