Prime Minister Rishi Sunak has announced the Windsor Framework, developed in conjunction with the European Union which amends the Northern Ireland Protocol ...
- smooth out the flow of trade within the UK's internal market
- safeguard Northern Ireland's place in the Union of the United Kingdom
- addresses the 'democratic deficit' perceived by NI political parties
The deal will, of course, be subject to a vote in Parliament, although the timings of this vote have not yet been confirmed. It is far more extensive than that being discussed in this blog post, so today, I'm going to concentrate on VAT and duty implications.
The Windsor Framework has established a new UK-wide internal trade scheme that is based on commercial data-sharing rather than actual international customs processes.
The existing NI protocol has a framework that allows goods to move from Great Britain to Northern Ireland tariff-free, but anything not falling within the framework has been treated as moving across an international border, which needs a full customs declaration. Now, we have a green lane for internal trade!
In a nutshell, goods being sold in Northam Ireland are no longer subject to unnecessary paperwork, checks and duties as they were under the original NI Protocol. This means a significantly expanded number of businesses can freely move goods using the green lane as they are treated as internal UK traders.
There are three changes involved:
- Any business in the whole UK is eligible, not just those with premises in Northern Ireland
- turnover limits for businesses involved in the scheme is quadrupled to £2 million
- turnover above the threshold is still eligible if the products are involved in animal feed, healthcare, construction or not-for-profit sectors
Businesses just need to show their goods will stay in Northern Ireland by using ordinary commercial data rather than customs data.
When it comes to VAT, under the existing NI Protocol, all goods in Northern Ireland were subject to EU VAT and excise rules and this was seen as grossly unfair, especially with the introduction of a zero rate for energy-saving materials being applied elsewhere in the UK.
I remember saying back in the days of Brexit that Northern Ireland needed to be treated the same as Great Britain in as many cases as possible, and it seems the Windsor Framework is taking steps to fix the failings of the original Northern Ireland Protocol.
Let's see how it progresses through Parliament in the coming months.
If you feel inspired to find out more about anything I've said here, do call me on 01908 774320 or leave a comment below and I'll be in touch as soon as I can.