Brexit: Moving goods in and out of Northern Ireland

Trade with Northern Ireland (NI) post-Brexit, particularly from Great Britain (GB), is raising a number of challenges, given its special status under the NI Protocol. We highlight the key issues and potential mitigations.
   

NI to EU

First, one area where there are no significant new requirements: moving goods between NI and the EU. There are no customs or regulatory checks, declarations or tariffs. The CE mark will continue to be used in NI but businesses using UK certification bodies will need to use the UK(NI) mark in addition to the CE mark. For VAT, NI traders need to put an “XI” prefix in front of their VAT number when communicating with VAT registered customers in the EU, and complete an EC sales list.
 

NI to GB

This also raises few issues. Northern Ireland “qualifying goods” have “unfettered access” to GB, with no customs or regulatory checks, declarations, tariffs or other new requirements. To note:

• “Qualifying goods” – for now – means goods that are in free circulation in Northern Ireland i.e. not under a customs procedure or in an authorised temporary storage facility. In the course of 2021, the government intends to introduce a new regime to restrict unfettered access to only businesses that are established in NI;
• There are exceptions for highly regulated products, such as some chemicals;
• Goods processed in NI qualify if all the components were in free circulation in the UK;
• Goods shipped from the EU to GB via NI do not qualify; these are treated as exports from the EU to GB;
• Goods shipped from NI to GB via the EU should use transit procedures or follow the process for importing items into the UK from the EU, but will pay no import duties or VAT;
• There are no changes for excise goods moving directly from NI to GB;
• No new regulatory approvals are required to place qualifying NI goods on the GB market. NI goods carrying the CE mark (and, if certified by a UK assessment body, the UK(NI) mark) will be valid for sale in GB without the need for the new UKCA mark.

 

GB to NI

This is more problematic. The key points:

• there is no requirement for export or exit declarations from GB;
• but new digital import declarations and safety and security information are required for goods entering NI. The Trader Support Service is available to manage these on behalf of traders;
• most EU product regulations continue to apply in NI. As a result, products need to be certified to EU standards and NI companies receiving goods from GB assume responsibilities as ‘importers’ of those goods.

In principle, there are no tariffs on GB goods imported into NI since both form part of the UK customs territory. But, since there is effectively no border between NI and the EU,  goods that are deemed to be ‘at risk’ of being moved from NI to the EU need to pay the applicable EU tariff when they enter NI. Businesses established, or with a fixed place of business, in NI are able to apply through the UK Trader Scheme to declare that their goods are not ‘at risk’. (Applications before the end of February will be granted provisional authorisation for four months.) Goods are not ‘at risk’ where either:

• the UK tariff is equal to or higher than the EU tariff;
• the goods are for sale to, or final use by, end consumers in NI or GB; or
• the goods are for processing and either your turnover is below £500,000 or the purpose of the processing is:
  • food for sale to end consumers in the UK;
  • permanent construction in NI;
  • direct health and care provision;
  • not for profit activities; or
  • animal feed for final use by the importer.

If none of these conditions is met, the applicable EU import duty will be payable when the goods are imported into NI. Goods for processing in NI will be assessed for duty on the basis of what they are currently, not what they will become. Potential workarounds include:
 

• claim a waiver, up to the limits set out in guidance (up to €200,000 over three tax years, but currently not available for fisheries and agricultural primary production);
• if the goods will be re-exported from the UK, declare the goods to inward processing relief which would allow their processing in NI and subsequent re-export without tariffs being charged;
• seek reimbursement: in due course, HMRC will be publishing details about a reimbursement scheme for goods that attract the EU tariff on entry to NI but can later be demonstrated to have been consumed in NI or GB.

Two particular complexities have emerged:​

• Rules of Origin: under the UK-EU Trade and Co-operation Agreement, many goods qualify for zero tariffs, but only if they satisfy the Rules of Origin in the Agreement. These rules require a certain level of processing to have been carried out in, or a proportion of the parts to come from, the UK or the EU. Goods imported into GB from a non-EU country, subjected to some processing in GB and then shipped on to NI may have to pay duty if the processing in GB is insufficient to meet the Rules of Origin and if the goods are ‘at risk’ of being moved to the EU;

 

• Tariff Rate Quotas: for certain goods that are subject to EU safeguarding duties (e.g. some steel and agricultural products) and that do not meet the Rules of Origin under the trade agreement, the EU has allocated tariff-free quotas to the UK (as it has to other countries). Quantities exported from the UK to the EU within those quotas enter the EU duty free. However, NI is treated as part of the UK and not the EU with respect to their free trade agreements (FTAs) and Tariff Rate Quotas with third countries. Thus quotas granted to the UK by the EU do not apply to imports into NI. As a result, for example, imports of some steel products from GB to NI were being charged 25% duty if they were ‘at risk’ of being moved into the EU. As a temporary fix, the UK’s quotas are being extended to cover such goods to avoid this charge while more permanent arrangements are negotiated.

 

NI – Rest of the World

The processes for moving goods between NI and the rest of the world are broadly unchanged, although NI traders need to use an EORI number that starts with ‘XI’ rather than ‘GB’. But there is a key difference: as noted above, NI is treated as part of the UK with respect to its FTAs and Tariff Rate Quotas with third countries.

This means that if goods are imported into NI from a third country with which the UK has a FTA, or the UK has been granted a duty-free quota, duties may still be payable in NI if the goods are deemed to be ‘at risk’ of entering the EU. Unless a work around can be found, this could place NI businesses at a competitive disadvantage to their GB counterparts.