Lee Squires, Director, Indirect Tax
From 1 January 2021, the Northern Ireland Protocol to the Brexit Withdrawal Agreement created a customs and regulatory border down the Irish Sea.
There has been considerable focus in the media on the delays, logistical issues, and extra red tape that businesses face when moving goods from Great Britain into Northern Ireland. However, less attention has been paid to the tariffs that are potentially payable on these goods. Goods moving from GB to NI will generally be subject to EU tariffs if they are considered ‘at risk’ of being moved into the EU, although there are some cases where tariffs will not apply.
First, a trader can apply to become authorised by HMRC under the ‘UK Trader Scheme’, and declare that the goods it imports are not ‘at risk’, if it can evidence the goods are entering NI for the purposes of sale to or use by final consumers in the UK. However, subject to limited exceptions, this declaration cannot be made if the goods are to be processed in NI.
Secondly, no tariffs will be payable if the goods are of UK origin and eligible to claim a zero preferential tariff under the free trade agreement between the UK and EU. The difficulty here is that rules of origin are complex and can depend on where the last significant processing occurred or where the components of a product originated from. Perhaps surprisingly, EU origin goods are subject to tariffs when entering NI from GB unless sufficient processing of the goods has occurred in GB.
Goods from third countries that have paid the UK tariff on import into GB may face a second charge to duty on import into NI.
Thirdly, importers can claim a waiver of the duty provided this is within their state aid allowance under EU law. Most businesses can claim a waiver of up to €200,000 over 3 tax years, assessed on a rolling basis.
In our experience, the worst affected businesses are those engaged in manufacturing and distribution in NI, which exceed the waiver limits.
Most businesses are using the government’s free Trader Support Service (TSS) to submit their customs declarations and pay any duties. Problems and delays with the TSS’s systems mean that many businesses are only now submitting their declarations for imports from early 2021 and realising the potential tariff costs. Businesses also need to be clear which party (the supplier or customer) is acting as the importer into NI and responsible for dealing with customs issues.
Fortunately, there are customs special procedures and reliefs that can assist affected businesses in some (but not all) scenarios. For example, inward processing relief can remove tariffs where goods are being imported for processing and the finished product is re-exported to GB or outside the EU. Other relevant procedures include outward processing, customs warehousing, transit and returned goods relief. However, these procedures can introduce significant complexity and businesses are likely to need specialist advice to implement them.
For further information or advice, Lee Squires can be contacted at
Grant Thornton (NI) LLP specialises in audit, tax and advisory services.