Business

Brexit Deal: Trade and customs implications for Northern Ireland business

If the Northern Ireland Protocol is agreed, businesses here should still be protected from the worst consequences of no deal
If the Northern Ireland Protocol is agreed, businesses here should still be protected from the worst consequences of no deal If the Northern Ireland Protocol is agreed, businesses here should still be protected from the worst consequences of no deal

As a consequence of the recent events in the UK Parliament in respect of the Brexit Withdrawal Agreement, the UK Government is now faced with an extension to its departure date from the EU.

What does this mean for Northern Ireland business?

Whilst the no deal threat has not completely gone away, it is now less likely. There is still the potential for no deal, either at the end of the current planned extension period at January 31, or potentially at the end of the transition period at December 31 2020, where the UK has not agreed a Free Trade Agreement (FTA) with the EU.

However, if the Northern Ireland Protocol is agreed, NI business should still be protected from the worst consequences of no deal.

In terms of the deal and in particular the Northern Ireland Protocol, whilst there is still a lack of detail on many issues, it should allow the many small NI businesses that depend on it frictionless trade on the island of Ireland (no tariffs, no checks).

This results from Northern Ireland being required to apply EU customs rules to goods and the movement of the customs and regulatory border to the Irish Sea. In addition, Northern Ireland business should have tariff free access for goods to and from other EU countries.

Northern Ireland business would also benefit from existing EU FTAs with rest of world countries and any new trade deals that the UK may agree. So far so good.

In respect of the movement of goods from NI to GB and GB to NI, the picture is less clear.

It is currently the intention that goods moving from GB into NI will require a customs declaration. If the goods remain in Northern Ireland then no tariffs apply, however, if the goods are at risk of moving on into ROI, or EU then a tariff will have to be collected on behalf of the EU.

For goods that are sourced in Northern Ireland and move the other way into GB, there may be a need for an exit summary declaration, however, there should be no tariffs. Further clarification is required on whether the UK may implement special tariff rules for certain categories of goods movements to the UK which enter through the NI backdoor.

For example, goods originating from outside Northern Ireland which are shipped to GB via NI. If the UK and EU agree an FTA with zero-tariffs, the declaration system could be simplified, and the likelihood of any tariffs reduced.

In relation to VAT rules, Northern Ireland will remain part of the UK VAT area, however, it will be aligned to EU VAT rules on goods only.

In summary, this deal, whilst far from perfect, would certainly be better than no deal and it could be argued that it gives Northern Ireland business a potential advantage over ROI competitors (due to comparatively unfettered access to the GB market) and also over businesses in GB who would not have the same unfettered access to the EU market.

Whether it is “best of both worlds” is open to debate and there may be some losers, however, that seems to be the price of getting Brexit done.

Frankie Devlin is a Tax Partner in KPMG, which is currently partnering with the Institute of Directors Northern Ireland to deliver its Brexit Ready NI initiative, and heads up KPMG’s Indirect Tax Services group in Northern Ireland.