Policy paper

The Customs (Northern Ireland: Repayment and Remission) (Eu Exit) (Amendment) Regulations 2023

Published 12 June 2023

Who is likely to be affected

Businesses that:

• import goods to Northern Ireland
• move goods between Northern Ireland and Great Britain (England, Scotland and Wales)

General description of the measure

The measure establishes arrangements under which customs duty charged to traders in Northern Ireland can be reclaimed from HMRC, or remitted before the duty is paid. These arrangements will be available where customs duty in Northern Ireland has been calculated with reference to EU tariff rates, and certain conditions concerning the sale or use of the goods outside the EU are satisfied.

Policy objective

To recognise the position of Northern Ireland as an integral part of the customs territory of the UK by providing for duty charged in Northern Ireland at EU tariff rates to be repaid to traders, or remitted without payment, where it can be shown that the goods on which the duty was charged were ultimately not destined for the EU.

Background to the measure

The United Kingdom’s approach to the agreement between the United Kingdom and the EU on various issues in the Northern Ireland Protocol, including those relating to customs, was set out in the command paper, ‘The Northern Ireland Protocol: the way forward’ of 21 July 2021. In its command paper of July 2021, the UK Government set out its intention to make full use of provisions in the Northern Ireland Protocol allowing it to waive and reimburse tariffs on goods moving from Great Britain to Northern Ireland.

In its command paper of February 2023, ‘The Windsor Framework: A new way forward’, the Government set out its intention to establish a comprehensive tariff reimbursement scheme for cases in which traders can show that goods entering Northern Ireland were ultimately not destined for the EU.

Detailed proposal

Operative date

The provisions on repayment and remission of customs duty will come into force on 30 June 2023. These provisions will be available for customs duty incurred in Northern Ireland since the end of the transition period on 31 December 2020.

Current law

The Taxation (Cross-border Trade) Act 2018 (TCTA) establishes the framework for a UK customs duty regime.

Section 30A and 40A of the TCTA provide for customs duty charges that apply for goods in Northern Ireland. Further provisions, including details of reliefs from these duty charges, are set out in the Customs (Northern Ireland) (EU Exit) Regulations 2020 (SI 2020/1605).

The Customs (Contravention of a Relevant Rule) Regulations 2003 (SI 2003/3113) set out cases in which a penalty may be applied for breaches of customs requirements.

Proposed revisions

The measure provides for new repayment and remission arrangements in relation to customs duty chargeable in Northern Ireland under section 30A or 40A of the TCTA. Traders who have incurred a customs duty liability in Northern Ireland that is calculated with reference to EU duty rates because their goods were treated as ‘at risk’ of entering the EU, may claim (i) a full or partial repayment of duty paid, or (ii) remission of some or all of the duty amounts deferred under duty deferment arrangements.

Eligibility conditions to make a claim for repayment or remission of customs duty, and the classes of goods in relation to which a claim can be made, are set out in a document entitled ‘Duty incurred in Northern Ireland — repayment and remission on production of evidence: eligibility criteria and other conditions’. The classes of goods for which a claim can be made include goods which have been removed from Northern Ireland, goods which are used by end- consumers in Northern Ireland and goods permanently installed or destroyed in Northern Ireland — providing that these goods have not entered the EU. It is intended that these repayment and remission arrangements will only be available where duty has been incurred by a trader in the course of a commercial activity. A repayment or remission claim must include evidence that the relevant conditions are satisfied in relation to the claimant and the goods.

The measure also sets out rules for the granting of claims by HMRC and imposes certain record keeping and notification requirements upon claimants. Details concerning the form and manner of a claim and other notifications that are required to be given to HMRC by the claimant, as well as records to be kept by a claimant, are set out in a notice published by HMRC.

In addition, there are rules for cases in which there has been an error in a claim and provisions allowing a penalty to be applied where there is a breach of the rules in relation to a claim.

Summary of impacts

Exchequer impact (£ million)

2023 to 2024	2024 to 2025	2025 to 2026	2026 to 2027	2027 to 2028	2028 to 2029
—	—	—	—	—	—

Costings, where required, will be subject to scrutiny by the Office for Budget Responsibility and included in their forecasts at a future fiscal event.

Economic impact

This measure is not expected to have any significant macroeconomic impacts.

Impact on individuals, households and families

There is no impact on individuals as this measure only affects businesses. There is not expected to be any impact on family formation, stability or breakdown.

Equalities impacts

It is not anticipated that there will be any impacts on those in groups sharing protected characteristics.

Impact on business including civil society organisations

This measure is expected to have an impact on businesses and civil society organisations, who bring ‘at risk’ goods into Northern Ireland, by enabling a claim to be made for repayment or remission of customs duty in certain cases.

Making a claim for repayment or remission will be voluntary. However, any business wishing to make a claim will have to familiarise themselves with the relevant rules to decide if the benefits outweigh any costs. For businesses who decide to claim a repayment or remission of duty, one-off costs will include further familiarisation with requirements of a claim, and may also include training for staff on the changes. Continuing costs for businesses, if they use the scheme, may include recording more information and providing HMRC with more information than they do currently. The administrative cost to businesses is uncertain, as is how many businesses will choose to make a repayment or remission claim.

Businesses that decide to make a claim could find that their customer experience is negatively impacted as they will need to apply for the repayment or remission and provide evidence of eligibility to HMRC. However, these arrangements are voluntary, and businesses will have considered the benefits of this before they decide to submit a claim. To support businesses, HMRC will provide clear and targeted guidance on these new arrangements, including how to make a claim for repayment or remission.

Operational impact (£ million) (HMRC or other)

There will be costs to HMRC in operating these repayment and remission arrangements. The current estimate of resource cost ranges from £2 million to £4 million annually, however the work to understand the full impacts of the process has not been completed, and until then these estimates are subject to change.

Other impacts

Other impacts have been considered and none has been identified.

Monitoring and evaluation

The measure will be kept under review through communication and ongoing stakeholder engagement with trade bodies and other representative businesses.

Further advice

If you have any questions about this change, contact Zachary Azim, email: [email protected].

Declaration

Victoria Atkins MP, Financial Secretary to the Treasury, has read this tax information and impact note and is satisfied that, given the available evidence, it represents a reasonable view of the likely costs, benefits and impacts of the measure.