Customs, excise and trade
- For companies who will be importing and exporting, ensure you have relevant UK and EU Economic Operators' Registration and Identification (EORI) numbers in place so that you can continue to move products between the UK and EU post-Brexit
- Make sure you have some way to connect with the Customs Authorities. Appoint a customs broker who will prepare and file customs declarations through the UK and EU customs authorities' systems, or consider installing a solution to file your declarations directly. Customs brokers are in short supply and we are seeing some businesses using IT solutions
- Make sure you have a method in place to pay the duties, e.g. deferred payment account
- The rate of duty arising on goods depends on their customs classification. Ensure you have confirmed the commodity codes for all goods moving into and out of the UK and vice versa
- The UK recently released its draft tariff schedule which defines the duty rate applied to goods entering the UK from third countries. Should the EU and UK fail to ratify an FTA before 1 January 2021 many products shipped from Ireland and other EU Member States to the UK may be subject to customs duty. Companies should take this time to reassess the impact of these additional customs duties on their business.
- Understand the impact the change will have on your VAT working capital needs
- Identify your transactions that will change character from intra-community supply or acquisition to being Exports and Imports. This may;
- Impact the taxiing and reporting obligations applicable to them
- Necessitate ERP tax decision and tax report reconfiguration
- Necessitate related documentation and reporting changes
- Impact existing VAT registration obligations or create new obligations or both
- Consider the impact on your supply chains which currently benefit from Triangulation simplification measures (Triangulation can only apply to cross border movements between Member States) and understand the consequential changes to taxing and reporting those transactions
- Ensure you have visibility of the supplies and purchases of goods in which you engage that involve a movement of those goods between Northern Ireland and the rest of the UK
- For those providing VAT exempt services, identify supplies of services which may become "qualifying activity" for VAT deduction purposes thereby unlocking previously non-deductible VAT
- Inevitably, Brexit will give rise to personnel travelling or commuting as short-term business visitors. The rules regarding the obligation to operate Irish PAYE need to be considered and whether either the role undertaken (e.g. CP86) or presence in Ireland triggers an obligation to operate payroll withholdings
- More formal postings can, with planning, be structured more tax efficiently, through the use of Special Assignee Relief Programme, housing exemptions, generous relocation rules and availability of the remittance basis for investment income
- EU social security rules will expire at the end of the transitional period, i.e. 31 December 2020. Similar rules will take effect, however, it will give rise to new applications having to be made under the Ireland-UK Bilateral Agreement on Social Security. This will need to be planned for
- Depending on the nature of the transfer, and given that individuals may be moving from the UK to the Irish taxation regime, there can be the possibility of accumulating a pension fund in Ireland. This may fall outside of UK Lifetime Limits on pension fund accrual
- While COVID-19 has restricted movement across Europe, Irish and UK citizens are still free to move within the Common Travel Area, albeit with both countries introducing quarantine measures for travellers. However, immigration may now be a consideration for UK nationals moving within the rest of the EU, and EU nationals travelling to the UK, and businesses may need to seek advice
- During the transition period to 31 December 2020, it's business as usual for financial services firms as EU law continues to apply to firms serving UK clients and markets. However from 1 January, 2021 the ability of firms to passport financial services to or from the EU or UK will cease to be available
- On the positive side, the UK has undertaken a consultation to facilitate the continued sale of EU investment funds (UCITS and AIFs) into the UK. Called the 'Overseas Funds Regime', this is very important for Asset Management firms who sell Irish or other EU funds into the UK. We are engaging with clients on these proposed arrangements
- UK based financial services firms which have been planning to rely on the equivalence provisions in EU financial services regulations to continue to serve clients may have to make alternative arrangements as it appears that little progress has been made on the equivalence decision which the EU and UK were aiming to complete by 30 June under the Withdrawal agreement
- For EU firms providing financial services into the UK, the UK's temporary permissions regimes (TPR), which allows EU firms which have registered under the TPR regime to continue to continue to serve UK clients, will take effect at the end of the transition period and will last for a period of up to three years
- Financial services firms which have already implemented their Brexit contingency plans by establishing regulated entities in Ireland should be planning to complete any necessary implementation actions such as novating relevant client contracts before the end of the transition period
Northern Ireland (NI) and trade
The UK published the approach it intends to adopt in respect of the NI Protocol in a recent "command paper". It should be noted the paper represents the UK position only. It does not indicate the acceptance of such an approach by the European Union.
Some of the main points from the paper are as follows:
- Tariffs: Trade going from Great Britain (GB) into NI will not be subject to tariffs or will be reimbursed, once the goods remain within the UK customs territory. Any goods ultimately entering Ireland or the rest of the EU, or at clear and substantial risk of doing so, will face tariffs
- Movement of goods from GB to NI: While there is considerable emphasis within the document to mitigating any checks within its internal market, the UK approach concedes that customs formalities and import declarations will need to apply to goods moving from GB to NI
- Movements of goods from NI to GB: The paper states there will be no import or export declarations, regulatory or customs checks, and no tariffs. There may be some limited exceptions to this principle. The paper indicates that the UK government does not intend to make exit summary declarations a requirement
- Agri-food and customs infrastructure: There will be no new physical customs infrastructure, but expansion of some existing entry points for agri-food goods is planned
- VAT, excise and other areas: The paper acknowledges that the Protocol means that certain EU VAT and excise rules will continue to apply in Northern Ireland
- This document also addresses wider trade matters relating to the regulation of goods, subsidies, single electricity market, agricultural subsidies and fisheries
We are here to help you
Businesses in Ireland, like many around the world, are operating under significant pressure and unprecedented uncertainty. Against the backdrop of COVID-19, the compounding effect of a possible no-deal Brexit is hard to consider.
COVID-19 has meant fundamental changes to trade across the continent and the last three months have effectively been a dry run for Brexit and the challenges it will cause. Companies will be operating in a depressed European market for the foreseeable future. Operating models need to be agile as businesses react to a new commercial outlook.
It is time to realistically and pragmatically take the learnings from the coronavirus pandemic and apply them to a no-deal scenario. Our experience in supporting our clients in uncertainty can help you to plot a way forward. Contact us today; we are here to help you.