Back to Brexit Basics

Brexit

Last week, we looked at what’s contained in the Brexit Omnibus Bill published by the Irish Government.  This week we look at the practical steps you can take to prepare for trade after Brexit; applying for an EORI number. To move goods into or out of the EU you need an Economic Operator and Registration Identification (EORI) number.  Therefore Irish and UK traders who trade with each other will need to apply for an EORI number. HMRC and Revenue use this number to identify you and collect duty on your goods. The number is also used when traders interact with customs authorities in any EU Member State. A short eLearning tool for EORI is available to download from the European Commission website. Applying for an EORI number in the Republic of Ireland You can register for an EORI number on Revenue’s EORI online registration service through My Account or ROS. It is important to note that some traders may have already been automatically registered for an EORI number by Revenue and may not have to apply for one. Back in 2009 when EORI numbers were introduced, Revenue allocated EORI numbers for economic operators that held a customs and excise registration at the time. You can check if you were automatically registered for EORI by accessing the Economic Operator Identification and Registration system. You should insert your existing VAT number prefixed by “IE” under “Validate EORI numbers”. My Account If you access the EORI online registration service via My Account, you should make a request for an EORI registration through My Enquiries. ROS applications If you use ROS to access the EORI online registration service, you need to ensure that you have a valid ROS digital certificate and you need to be registered for customs and excise. If you are not registered for customs and excise, register using the following steps: Click on 'Manage Tax Registrations'. Under 'Registration Options' click on 'Register' beside Customs and Excise. Enter all the details on the eRegistration form. There will be a check box option to declare if you are 'importing/exporting goods to/from the EU'. If this option is not selected, click 'Add To Your Requests'. Under the 'Requests' section, click on 'Submit'. You will now be registered for customs and excise.  Once you have successfully completed this registration, you can then apply for an EORI number using ROS. An EORI number will issue in a few days.  An agent can make an application on your behalf. All details can be found on Revenue.ie and Revenue operates a helpline for EORI queries Applying for an EORI number in the UK Before you apply Check if you need to register for VAT before you apply To apply for an EORI number, you may need you: To apply you may need your: VAT number and effective date of registration - these are on your VAT registration certificate National Insurance number - if you’re an individual or a sole trader Unique Taxpayer Reference (UTR) business start date and Standard Industrial Classification (SIC) code - these are in the Companies House register Government Gateway user ID and password If you need a Government Gateway user ID, use either: the one for your business or organisation your own if you’re applying as an individual If you do not already have a user ID, you’ll be able to create one when you apply. Apply for an EORI number You can apply online to get an EORI number using this link HMRC advises that it takes between 5 and 10 minutes to apply for an EORI number.  Numbers can be issued immediately or could take up to 3 working days if the HMRC needs to carry out more checks. For help or any queries, you can contact the EORI team on 0300 322 7067 Monday to Friday, 8am to 6pm (closed bank holidays). Further details can be found on gov.uk.

Mar 07, 2019
Brexit

Last week, we looked at the changes that are proposed for claiming back EU VAT suffered by UK businesses in the event of a no-deal Brexit. This week we look at what’s contained in the Brexit Omnibus Bill published by the Irish Government. The Irish Government recently published its Brexit Omnibus Bill, a 15 part series of legislation designed to protect the Irish economy and its citizens in the event of a no-deal Brexit. The Bill prioritises issues that need to be addressed urgently and immediately through primary legislation at national level. Each Part will be commenced by the individual Minister at the appropriate time. Legislative provisions have been put in place to deal with the following areas: Health services:  to enable essential Common Travel Area healthcare arrangements, including reimbursement arrangements, to continue between Ireland and the UK. Industrial development: to help vulnerable enterprises deal with the effects of Brexit by giving Enterprise Ireland extra powers to offer enhanced businesses through investment, loans and Research Development and Innovation grants. Electricity: The Commission for the Regulation of Utilities will be allowed to amend the licences of electricity market participants for one year without recourse to the normal modification and appeal processes, to facilitate the continuing operation of the Single Electricity Market. Student education: Some Irish students studying in the UK and UK nationals studying in the Republic of Ireland currently qualify for SUSI grants. This legislative provision makes sure that, even after Brexit, these arrangements can continue to apply to eligible students. Tax: The provisions cover corporation tax, income tax, VAT (including the postponement of VAT on imports from the UK), capital gains tax, capital acquisitions tax and stamp duty. The provisions extend existing legislative definitions to include the UK, in the event that they are no longer a member of the EU/EEA, in order to allow the continuation of existing arrangements in the immediate future. Read more about these provisions in the Irish tax section. Financial services: legislative amendments to support the decision of the European Commission to grant temporary equivalency in European legislation to the Central Securities Depositories and Central Counterparties based in the UK. The provisions also extend the protections contained in the Settlement Finality Directive to Irish participants in relevant third country domiciled settlement systems. Financial services – Insurance and Reinsurance: to enable UK insurance undertakings and intermediaries to continue to fulfil their contractual obligations to Irish customers for 3 years from Brexit day. Social welfare: the continuation of current benefits allowed under the Common Travel Area arrangements Bus services: a regulatory regime in relation to bus and coach passenger services between Ireland and the UK. Protection of employees: in the event of an employer becoming insolvent under UK law, their employees who work and pay PRSI in Ireland, will continue to be covered by the protections set out in the  Protection of Employees (Employers’ Insolvency)  Act. Extradition: In the event of a no-deal Brexit the European Arrest Warrant system will cease to apply to the UK.  Immigration: Immigration officers, when considering removing or deporting a person from the State, have the power to undertake refoulement consideration (i.e forcible return to the person’s original country). Harbours Act: Seafarers who have a pilot exemption certificate can apply for new certificates in the period leading up to 29 March 2019 even if their existing certificate has not expired. Read the Bill and the explanatory memorandum. Timeline for the passing of the Bill: Week of 25 Feb – Brexit Bill in 2nd Stage in Dáil; Week of 4 March – Brexit Bill in Committee, Report and Final Stage in the Dail; and Week of 11 March – Brexit Bill in Seanad  

Feb 28, 2019
Brexit

Last week, we looked at the simplified customs procedures the HMRC propose to introduce in the event of a no-deal Brexit.  This week we look at the changes that are proposed for claiming back EU VAT suffered by UK businesses in the event of a no-deal Brexit. If the UK leaves the EU without an agreement, then UK businesses will continue to be able to claim refunds of VAT from EU member states but in future they will need to use the existing processes for non-EU businesses.  This will mean a change in practice for businesses. As the UK will no longer be an EU Member State, UK business will no longer have access to the EU VAT refund system. According to recently released HMRC guidance, and in letters sent to impacted businesses, after 29 March 2019, UK businesses that suffer VAT in an EU country must claim VAT refunds from that EU member state by using the relevant member state’s existing process for businesses based outside the EU.  This includes outstanding claims that relate to 2018 expenses, and claims relating to 2019.  Read further guidance from HMRC. This process varies across the EU and UK businesses will need to make themselves aware of the processes in the individual countries where they incur costs and want to claim a refund. The general practice is that a claim is made directly to the EU country where the VAT arose.   VAT incurred in Ireland For example in Ireland, foreign traders established outside the EU (which will include UK businesses after Brexit) paying Irish VAT can claim back VAT from the Revenue Commissioners.  Revenue’s guidance on this process can be found here and there are strict conditions that need to be adhered to in order to reclaim VAT and not all VAT on expenditure can be reclaimed. The EU has also provided information on claiming back VAT incurred in Ireland and details can be found on the European Commission’s website. Readers can also find further general information about claiming VAT refunds from other EU member states on the EU Commission’s website. The above guidance is relevant in the event of a no-deal Brexit. We will keep members updated on developments in this area. Read all our Brexit updates on our Brexit web centre.  

Feb 21, 2019
Brexit

After a short break, this series is back with a look in more detail at the simplified customs procedures the HMRC propose to introduce in the event of a no-deal Brexit. Transitional Simplified Procedures (TSP) HMRC will introduce simplified customs procedures for 145,000 UK importers who trade with the EU in the event of a no-deal Brexit to enable goods to move freely through the UK.  This will also give traders a chance to prepare to apply the same customs processes when trading with the EU that already apply when trading with the rest of the world.  These simplified procedures will be in place for at least a year from 29 March 2019. HMRC have written to affected traders telling them about the Transitional Simplified Procedures (TSP) for customs which will make importing easier for a year after Brexit in the event of a no-deal. The TSP will mean that traders can import goods into the UK and defer making a full customs declaration and paying customs duties.  Specific information must be included on the declaration including: The date and time the goods arrived in the UK A description of the goods and the commodity code The quantity imported Purchase and (if available) sales invoice numbers The customs value of the goods The serial numbers (if appropriate) Delivery details Supplier details After the goods have been imported: a supplementary declaration must be sent by the importer by the fourth working day of the month following the arrival of the goods into the UK HMRC will take a direct debit on the 15th day of the month after the goods arrive in the UK if there are duties or taxes to pay Businesses must register for TSP to be able to transport goods from the EU into the UK without having to make full customs declarations at the border. Traders are able to postpone paying import duties for a month after import.  Import VAT will be due on the next VAT return rather than when the goods arrive at the UK border. Businesses can register for TSP from 7 February 2019 if they are established in the UK, import goods from the EU and have an EORI number.  The policy will be reviewed three to six months after it is introduced on 29 March 2019 to see how it is working. Businesses will be given at least a 12 month notice period before withdrawing the TSP.  After that time period has elapsed businesses must apply the usual customs processes to imports from the EU.  It’s envisaged by the UK government that the 12 month notice period will give business a chance to prepare. More information on the TSP can be found on Gov.uk and you can also read a copy of the letter sent to traders. Read all our Brexit updates on our Brexit web centre.

Feb 14, 2019
Brexit

Last week, we looked at the history of the EU. This week we look a little closer about how Ireland and the UK came to join the EEC (now the EU) in 1973. Ireland joins the EEC We learned last week that the Irish people voted to join the European Economic Community (EEC) in 1973. It wasn’t all plain sailing for Ireland or the UK in their bids to become members. In the years before joining, many of Ireland’s political leaders such as Seán Lemass and Jack Lynch argued that to secure a future for Ireland, it needed to be part of the EEC. The founding six countries (Belgium, France, Germany, Italy, Luxembourg and the Netherlands) of the EEC had doubts however. They weren’t confident that Ireland would be a suitable member due to its over dependence on the UK for agricultural exports, as well as the mass unemployment, poverty and emigration that was experienced at the time.  In fact, in 1963 French President Charles de Gaulle rejected the UK joining the community and this meant that all other applicant countries (including Ireland) had their negotiations abruptly ended.  A second attempt was made in 1967 but this was again blocked. Charles de Gaulle was then succeeded as French President by George Pompidou who in 1969 said that he would not block the possibility of UK and Ireland joining the community. Renewed negotiations began and in 1972 the Treaty of Accession was signed.  Ireland held a referendum in May 1972 under the leadership of Jack Lynch and 83 percent of voters supported membership.  Ireland formally became a member of the EEC on 1 January 1973. You can read more on the European Commission’s website. UK joins the EEC In 1961, the UK applied for membership of the EEC. The application was prevented by French President Charles de Gaulle, who was said to be concerned that UK membership would weaken the French voice in Europe. The French President was also reported to be afraid that the close relations between the UK and the United States would lead to the United States increasing its influence in Europe. A second application was again blocked by Charles de Gaulle in 1967. He formally stated that the UK economy would not be suited to membership of the EEC particularly given the UK’s practice of obtaining cheap foods from all parts of the world.   UK Prime Minister Edward Heath brought the UK into the EEC at the same time as Ireland in January 1973.  Along with Denmark and Ireland, this brought the membership of the EEC to nine countries. Under the Labour Prime Minister, Harold Wilson, there was a UK referendum on continued membership of the EEC in 1975. 67 percent of the electorate voted to remain. Read all of our Brexit updates and Back to Brexit Basics on the dedicated Brexit section of our website.    

Aug 16, 2018
Brexit

Last week, we looked at how traders might go about applying for Authorised Economic Operator (AEO) status.  This week we look at the history of the EU and where it all began.  A chronological history of the EU  We are all familiar with the EU, even more so since the UK voted to leave the union. This week we delve into the history books to examine how the EU came about and how it has changed and grown through the decades.  Beginnings…. The makings of the EU began in 1950 when the European Coal and Steel Community began to unite countries in Europe economically and politically seeking lasting peace. The founding countries were Belgium, France, Germany, Italy, Luxembourg and the Netherlands.   In 1957, the Treaty of Rome creates the European Economic Community (EEC) otherwise known as the Common Market.   During the 1960’s, these countries stopped charging each other custom duties when they traded with each other.  In 1973, the union grows to nine members when Denmark, Ireland and the UK join.  The EU regional policy started to transfer money to support job creation and infrastructure in poorer areas and the European Parliament began to increase its influence over European affairs.  In 1986, the Single European Act is signed. This treaty launched a six-year programme aimed at encouraging the free flow of trade across EU borders which resulted in the creation of the ‘Single Market’.  During the 1980’s Greece, Portugal and Spain join. Communism collapses in eastern and central Europe and results in European countries moving closer together.  In 1993, the EEC becomes the European Union. The Single Market is also completed and the 'four freedoms' emerge: movement of goods, services, people and money.  In 1995, Austria, Finland and Sweden join. People are allowed to travel without having their passports checked at the borders of member countries and this movement is called Schengen.  It gets its name from a small village in Luxembourg.  In 2002, the Euro becomes the currency of many European countries (currently 19 Member States).  In 2004, ten new countries join the EU with Bulgaria and Romania joining in 2007.  In 2009, the Treaty of Lisbon is passed by all EU countries and enters into force. It provides the EU with modern institutions and more efficient working methods.  In 2012, the EU is awarded the Nobel Peace Prize for its commitment to the development of peace, equality, reconciliation and human rights in Europe.  In 2013, Croatia becomes the 28th member of the EU in 2013.  In 2016, the UK votes to leave the EU.  Presently, there are 28 Member States (27 when the UK leaves) and 24 official languages used in the EU.  The most common are English, German and French. Other languages are Bulgarian, Croatian, Czech, Danish, Dutch, Estonian, Finnish, Greek, Hungarian, Irish, Italian, Latvian, Lithuanian, Maltese, Polish, Portuguese, Romanian, Slovak, Slovene, Spanish and Swedish. Many EU documents, such as debates in the EU Parliament are translated into all these languages.    You can find more historic website information on the European Union website. Read all of our Brexit updates and Back to Brexit Basics on the dedicated Brexit section of our website.  Guide on customs and supply chain issues after Brexit Chartered Accountants Ireland and The Institute of Chartered Accountants of England and Wales have released a joint publication entitled Taking the Lead: Chartered Accountants & Brexit which gives practical details of customs and supply chain issues after Brexit.  Download your free copy.  

Aug 09, 2018
Brexit

Last week, in Series 10 of Back to Brexit Basics, we looked at the three customs options that are currently on the table in the Brexit debate.  This week we look at how Brexit could give rise to an upfront VAT cost on trade between Ireland and the UK and we examine a solution to this cash flow issue. Measuring the VAT cost of Brexit The way VAT arises on goods imported into Ireland from the UK and into the UK from Ireland will change after Brexit.  At the moment, both the UK and Ireland are EU Member States and such goods are treated as intra- community acquisitions.  The purchaser is required to self-account for VAT on a reverse charge basis.  This means that the purchaser has to account for the VAT on the purchase of goods from the other EU Member State.  For business to business purchases, the supply is zero-rated in the Member State of dispatch and the purchaser accounts for VAT in their VAT return that is due for the period in which the acquisition took place. The rate of VAT is the rate that would apply in the purchaser’s Member State.  If the purchaser is entitled to an input credit for the VAT payable on acquisition, they can claim this on the same VAT return.   For example: A trader in Ireland purchases goods to the total value of €10,000 from the UK in May 2018.  These goods will be onward sold as taxable supplies in the Irish business.  The UK company does not charge VAT on the supply to Ireland and instead the Irish trader charges themselves VAT at the rate applicable in Ireland (23%) which amounts to €2,300.  The Irish trader can then also claim an input credit of €2,300 as the goods were purchased for taxable supplies (and assuming the purchase is deductible for tax purposes).  Therefore from a cash flow perspective, no VAT is payable on the VAT return in respect of this transaction. After Brexit Looking at this scenario after Brexit, the goods purchased from the UK into Ireland will be regarded as imports from a country outside of the EU.  For imports from outside the EU into the EU, importers must pay the VAT to the Revenue Commissioners in Ireland, or HMRC in the UK, at the time when the customs duties are paid rather than  at the time of filing their VAT returns. Imported goods are liable to VAT at the same rate as applies to similar goods sold in the importing country.  The value of the imported goods for VAT purposes includes customs duty, anti-dumping duty and excise duty (excluding VAT), and certain transport, handling and insurance costs. Therefore taking the above example, the VAT of €2,300[1] that arises for the Irish business on the goods imported into Ireland from the UK becomes payable to Revenue in Ireland immediately on importation in May 2018.  The Irish trader then claims an input credit of €2,300 in the May/June 2018 VAT return which is filed weeks later in July 2018 (assuming returns are filed bi-monthly).  In contrast to the intra-community acquisition scenario, the Irish trader in this situation has an upfront cost of €2,300 which it can’t claim as a deduction for several weeks.      It should be noted that at the moment for imports from outside the EU into Ireland, most traders have a deferred payment account with Revenue which means that the amount of VAT that is due is not taken from the traders account until the 15th day of the month following importation.  However for many traders that only trade with the UK or other EU Member States, they will not have a deferred payment account with Revenue. A possible solution? A possible solution to this problem in Ireland, at least for some traders, is the postponed method of accounting for VAT which is provided for in Article 211 of EU Council Directive 2006/112/EC. The UK’s replacement of EU VAT legislation could permit an equivalent solution as part of the exit arrangements with the EU. Under postponed accounting, importers do not pay import VAT at the point of entry but must declare the payment of their import VAT in the next VAT return period and deduct the relevant input VAT in the same VAT return.  The effect is comparable to existing mechanisms for cross border trade within the EU described above.  Update: Both the UK and Irish government have said that they will implement the postponed method of accounting for VAT in the event of a no-deal Brexit. Adopted in several other EU Member States Several other EU Member States such as Bulgaria, Poland and Romania have already adopted the postponed method of accounting into domestic legislation and it is felt that an adoption of the provisions by Ireland and the UK would benefit Irish and UK businesses greatly in light of the level of trade between Ireland and the UK. The majority of EU countries that have adopted the postponed method of accounting have land borders with non-EU countries and trade with these countries. This highlights the importance of the method and will be paramount given the land border on the island of Ireland. Leaving the EU without this or a modified version of this proposal in place in either the UK or in Ireland, would mean a cash flow benefit of VAT payable on imports for each exchequer but the cost of this would be borne by businesses that need to pay the VAT up front and then recover later. This would create cash flow costs and administrative burdens – all generated by Brexit – and none of which exist at present.  Chartered Accountants Ireland has been calling for the introduction of the postponed method of accounting for VAT for the past 12 months and has this week issued a joint press release with the Institute of Chartered Accountants of Scotland (ICAS) calling for action. Read all of our Brexit updates and Back to Brexit Basics on the dedicated Brexit section of our website. [1] Assuming that €10,000 represents the total value for VAT purposes

Jul 03, 2018

Series five looked at how customs procedures could be simplified in instances where traders obtain Authorise Economic Operators or AEO status.  This time we look at Common Transit procedures which simplify customs procedures when goods move through a number of countries to reach their final destination. Common Transit Common Transit is an EU customs procedure that allows goods to move between the EU and common transit countries or between the common transit countries themselves with duty being paid in the country of final destination.  This procedure facilitates the movement of goods by temporarily suspending duties and other charges on imported goods until they reach their final destination. Common Transit may therefore be useful for road freight that transits from Ireland through the UK to mainland EU or from the UK through the EU to Asia for example. The Common Transit Convention does not not deal with regulatory checks – such as sanitary checks on agri-food products. Nor does it deal with the ability for road hauliers to operate in the UK, The common transit countries are Switzerland, Norway, Iceland and Lichtenstein (the EFTA countries), Turkey, Macedonia and Serbia. Each member state and common transit country has designated customs offices.  Import charges on goods that move under the common transit convention are suspended and collected at the customs office of destination in the member state and not at the external frontier.  This means multiple customs charges do not arise. UK to become a party to the convention The UK announced on 17 December 2018 that it will become a party to the Common Transit Convention in its own right regardless of what Brexit deal is reached. Read the statement. The Institute welcomed this announcement and you can read our press release here.  The administration In order to avail of the benefits of the common transit area, declarations under the common transit system must be made electronically at the place of departure, using the New Computerised Transit System (NCTS) which is used by all common transit countries. A Transit Accompanying Document known as a TAD must accompany the goods during transit and be presented along with the goods at an office of transit or at the office of destination. The movement of goods under common transit ends when the goods and the TAD are presented at the approved office of destination.  In addition to the Common Transit procedure, there are two other transit procedures: 1. Union Transit, where the transit operation only covers the movement of goods within Union (EU) territory (and Andorra and San Marino). 2. TIR (Transports Internationaux Routiers) where the movement includes movement over Union territory and one or more third countries which are party to the TIR Convention 1975. More information can be found in the European Commission’s Transit Manual.  

Jul 03, 2018