HMRC publish details of “at risk” guidance

Dec 16, 2020

Earlier this week HMRC published the first version of its “at risk” guidance. This guidance establishes if you need to pay tariffs on the goods you bring to NI because they are at risk of onward movement to the EU. The guidance also sets out details of the 31 December 2020 application deadline for the UK Trader Scheme (see more on this below – note, it is not to be confused with the Trader Support Service) for moving goods “not at risk”, and an important de-minimis test for businesses which have a turnover less than £500,000 and which bring goods into NI for commercial processing.

The Institute has had initial discussions with HMRC about this guidance. HMRC are keen to stress that the guidance is live and subject to potential change. We therefore recommend you bookmark the guidance page and check back regularly for updates. The NI Tax Committee is seeking further engagement with HMRC on the definition of “at risk”, in particular, and the short timescale for applying to the UK Trader Scheme.

When duty may arise

From 1 January 2021, businesses will need to make declarations and may need to pay any tariffs due when bringing goods into NI from GB or from countries outside of the EU. Whether these businesses have to pay duty, and how much that duty is, will depend on where the goods are coming from and if they are “at risk” of onward movement to the EU.

If goods are “not at risk” then the business will either pay:

  • zero duty, if moving goods into NI from GB; or
  • UK duty, if moving goods from a country outside the EU.

If a business intends to bring goods into NI which are not at risk of moving to the EU, then they must apply for an authorisation for the UK Trader Scheme – more detail on this is below. However, this scheme is not available where goods enter NI from outside of the UK and a country outside of the EU and the differential between the UK and the EU tariff is 3 per cent or more.

“Not at risk” definition

The key, therefore, is to decide if goods are or are not “at risk”. Goods are “not at risk” where either:

  • the applicable UK tariff is equal to or higher than the applicable EU tariff (for movements into NI from GB, this covers goods where the EU tariff is zero); or
  • goods are brought into NI for sale to, or final use by, end consumers located in NI or for internal UK trade elsewhere in the UK.

Goods entering NI for commercial processing

The Northern Ireland Protocol treats goods entering NI for commercial processing differently. The guidance contains specific rules which cover scenarios where goods are brought into NI for commercial processing.

A business with a turnover below £500,000 in its most recent financial year bringing goods into Northern Ireland for processing can apply through the UK Trader Scheme to be able to declare goods as “not at risk”.

Businesses can also apply to the UK Trader Scheme for authorisation to be able to declare goods for processing as not “at risk” if the goods they intend to bring into Northern Ireland are for certain purposes. These include goods for processing where the purpose is:

  • food for sale to end consumers in the UK;
  • construction, direct health and care provision, and not-for-profit activities carried out by importers in Northern Ireland; and
  • processing of animal feed for final use at premises located in Northern Ireland by the importer.

More detail on the UK Trader Scheme

Goods moved for sale to, or final use by, end consumers will be considered “not at risk” when moved by businesses authorised under the UK Trader Scheme. This, therefore, means that authorisation under the UK Trader Scheme will be a critical element for businesses.

In order to declare goods movements as being not “at risk from 1 January 2021, the business must have applied for UK Trader Scheme authorisation by 31 December 2020. In recognition of the tight timescale available to businesses to apply, if a business applies before the end of February 2021, subject to the necessary conditions being met, it can be granted a provisional authorisation while HMRC processes their application. During this time the business can declare goods as not “at risk”.

Applications received after the end of February 2021 will be processed as normal. The guidance also sets out that the application process can typically take up to a month; therefore, a business must ensure it applies one month before it intends to declare goods as not “at risk”.

With many businesses closing in the next few days for the Christmas break, we are seeking a pragmatic solution from HMRC which recognises that the guidance has been published so late and that the timescale for applying for the UK Trader Service is extremely challenging.

Applications for authorisation are via an on-screen form which can be saved onto a computer. Once complete, this form should be emailed to uktraderscheme@hmrc.gov.uk with the supporting documentation, quoting the EORI number of the business in the subject of the email.

This should be accompanied by proof of permanent business establishment or document of establishment (HMRC will provide more details on how this is defined in future guidance). A business may also provide evidence of its record-keeping to supplement the information provided in the application, but this is not mandatory.

We understand also from our initial discussions with HMRC that businesses which have already been granted trusted trader status, such as Authorised Economic Operator status, should find the application process faster, as HMRC will already have many of the details required for the application. We are also working with HMRC to provide businesses with an upfront full list of the information required to complete an application.

The guidance also sets out that businesses with a known history of serious non-compliance, or criminal offences relating to its economic activity, will not be eligible for the UK Trader Scheme.

Claim a waiver for duty on goods that you bring from NI to GB which might otherwise incur ‘at risk’ tariffs

From 1 January 2021, you will need to make declarations and may need to pay any tariffs due when bringing goods into NI from GB or from countries outside of the EU. If you are bringing goods into NI from GB, you may be eligible to claim a waiver on Customs Duty, which means that you would not have to pay the duty owed.

You can claim a waiver for duty on goods you bring into NI from GB which might otherwise incur ‘at risk’ tariffs if you have not exceeded the allowances set out in the UK's guidance (link below) your import declaration is submitted. The Trader Support Service can help with this process. 

Find out more