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Brexit: What the new deal means for goods in Northern Ireland

A new Brexit deal was this week announced by UK Prime Minister Rishi Sunak and Ursula von der Leyen, President of the European Commission, aimed at resolved the problems relating to the movement of goods across the Northern Ireland border.

But what exactly does the new Northern Ireland Protocol mean for businesses that ship goods to or from Northern Ireland, either from other parts of the UK or the EU?

Red and green lanes

The most significant change is the introduction of red and green lanes.

Under the current process that has been in place since the UK officially left the EU on 31st January 2020, goods heading from Great Britain to Northern Ireland are checked at ports upon arrival in Northern Ireland.

Once approved, they can enter Northern Ireland and subsequently the Republic of Ireland. However, the process of checking every shipment to arrive in the country has caused delays at the border and even led to shortages of some products in Northern Ireland over the last three years.

The new green lanes are designed to eliminate these delays.

Green lanes will allow:

  • Goods from Great Britain with a final destination of Northern Ireland to enter Northern Ireland with vastly reduced checks and paperwork.
  • Goods to be moved from Northern Ireland to Great Britain without export declarations.
  • Faster movement of goods in both directions, largely aided by new data-sharing and labelling arrangements.

Goods destined for the EU (most likely via the Republic of Ireland) will instead be diverted through red lanes.

Red lanes will still be subject to the current checks and administrative processes.

What does the new deal mean for VAT?

As part of the new Northern Ireland Protocol, the legal text relating to VAT has been changed and agreed by both the UK and the EU.

Under the current regulations, EU VAT and excise rules for goods are generally applied in Northern Ireland.

However, Mr Sunak confirmed this will change under the new agreement, with the UK able to “make critical VAT and excise changes for the whole of the UK”. It is believed the UK will also retake control of setting state aid and alcohol duty.

Indeed, Mr Sunak suggested that the price of a pint of beer in Northern Ireland could soon fall as a result of the UK assuming responsibility for alcohol duty.

While we await confirmation of the precise rates, rules and regulations the UK will set for VAT in Northern Ireland, it seems clear businesses will be required to apply changes to their processes to ensure ongoing compliance as soon as the new protocol becomes law.

Any other changes?

A series of additional legislative updates have been announced within the Northern Ireland Protocol, including:

  • The current ban on some items – including sausages and certain species of trees – entering Northern Ireland will be lifted.
  • Pet owners visiting Northern Ireland from Great Britain will only be required to confirm their pet is microchipped and that they do not intend to move into the EU. They will no longer have to carry a vet-issued health certificate and proof of certain vaccinations.
  • Medicines for use in Northern Ireland will no longer be of interest to the European Medicines Agency. Instead, approval by the UK regulator is all that is required.
  • From 2024, parcel delivery companies will be mandated to share data with the EU to minimise the risk of smuggling.

What happens next?

If the deal is formally approved by both sides, its name will change from the Northern Ireland Protocol to the Windsor Agreement and come into effect on a yet-to-be-announced date in the future.

How we will support our clients

Clients that have subscribed to our Support & Maintenance service will find all VAT changes that need to be made within their automated tax solution to reflect the agreements set out in the Northern Ireland Protocol are completed as standard.

We’re proud of our comprehensive Support & Maintenance service and the complete peace of mind it offers to clients.

All rate changes and legislative updates announced by tax authorities around the world are applied by our Support team; meaning the tax professionals using our tax technology do not need to do anything.

If you’d like to know more about our Support & Maintenance package, get in touch and we’ll be happy to help.