EU Exit Bulletin, 1 April 2022

In this week’s EU Exit Bulletin, we bring you HMRC’s response to our query on the procedure that should apply to goods that later become ‘at risk’ following import into Northern Ireland. Legislation has been enacted in relation to the EU’s e-commerce VAT rules and updated guidance has been published on the UK’s second-hand motor vehicle export refund scheme. We also bring you an email from HMRC on EU trade tips and the latest guidance updates.

At risk query and HMRC response

We recently asked HMRC what the process is for dealing with scenarios where goods come into Northern Ireland and at that time are declared ‘not at risk’ and then they subsequently leave Northern Ireland and become  ‘at risk’ including if there is a way to declare/pay the tariffs that are due as result.

According to HMRC, the correct process to follow (for both Trader Support Service (“TSS”) and non-TSS users) is the underpayments process. The trader would have to fill in a ‘voluntary clearance amendment (underpayment)’ form, but would not have to resubmit the original declaration. We have asked HMRC to confirm the compliance implications of making such an amendment.

E-commerce legislation

The Value Added Tax (Enforcement Related to Distance Selling and Miscellaneous Amendments) Regulations 2022 were laid earlier this month. This legislation implements changes to UK VAT legislation in the VAT Act 1994 as a result of the EU’s VAT e-commerce rules which took effect from 1 July 2021 and which the UK has implemented as a result of the Protocol on Ireland / Northern Ireland.

According to the accompanying Explanatory Memorandum, this Statutory Instrument “also amends legislation to remove the potential for double taxation of certain goods that move from a place outside the UK to Northern Ireland via Great Britain or the Isle of Man. It also provides legal certainty for businesses and individuals in the UK for claiming a repayment of overpaid import VAT.”

Second hand motor vehicles

HMRC has published guidance on the second-hand motor vehicle export refund scheme. This is a new scheme that the UK Government intends to introduce from 1 October 2022 which will allow businesses to claim a refund of VAT if it moves a second-hand motor vehicle from Great Britain (England, Scotland and Wales) to Northern Ireland for resale. The scheme is designed to replace the EU’s margin scheme which is temporarily available for businesses selling second-hand motor vehicles in Northern Ireland that have come from Great Britain, where certain conditions are met including the grant of permission from the European Commission (“EC”).

Chartered Accountants Ireland has been consulted by HMRC to assist in policy development in respect of the new export refund scheme and met recently with HMRC to discuss the draft guidance. The Institute also continues to press HMRC for an update on the EC’s view on the temporary availability of the second hand margin scheme post the end of the EU transition period.

Miscellaneous updated guidance

The following documents/guidance relevant to EU exit have been updated/published recently:-

• The House of Commons Library has published a research briefing on the Northern Ireland Protocol: Implementation, grace periods and EU-UK discussions (2021-22);
• Find out what types of Authorised Economic Operator status you can apply for;
• Importing food and certain agricultural goods from outside the UK;
• Importing certain agricultural goods and food from outside the UK;
• Changes in pay-rolled employments held by non-UK nationals during the coronavirus pandemic and EU Exit periods;
• Medical devices: UK approved bodies;
• EU Settlement Scheme: UK tax and benefits records automated check;
• High risk food and feed not of animal origin: model health certificates;
• Search the register of customs agents and fast parcel operators;
• EU Settlement Scheme: apply for an administrative review;
• Early insights into the impacts of the coronavirus pandemic and EU Exit on business supply chains in the UK;
• Tenth meeting of the Specialised Committee on the implementation of the Protocol on Ireland and Northern Ireland: joint statement; and
• Withdrawal Agreement Joint Committee.