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Brexit Transition – The Northern Ireland Protocol

Northern Ireland is, and will remain, part of the UK’s VAT system.

The Northern Ireland Protocol means that Northern Ireland maintains alignment with the EU VAT rules for goods, including on goods moving to, from and within Northern Ireland.

Under the obligations in the Protocol, import VAT will be due on goods that enter Northern Ireland from Great Britain and the same will broadly apply to goods entering Great Britain from Northern Ireland. However, existing flexibilities within the EU VAT rules have been used to ensure that the Government priority to minimise business impacts is met. UK government have therefore determined the practical details as to how this will operate. A notable change is made for businesses moving their own goods from Great Britain to Northern Ireland and vice versa. When a VAT registered business moves their own goods from Great Britain into Northern Ireland, VAT will be due. An entitlement to claim this as input tax may also be considered (subject to certain conditions).

A business will not be required to account for VAT when it moves its goods from Northern Ireland to Great Britain however, unless these goods have been subject to a sale or supply.

The new procedures in this respect and in various other scenarios are discussed in further detail here:

https://www.gov.uk/government/publications/accounting-for-vat-on-goods-moving-between-great-britain-and-northern-ireland-from-1-january-2021/accounting-for-vat-on-goods-moving-between-great-britain-and-northern-ireland-from-1-january-2021

Transactions in goods between Northern Ireland and EU businesses will continue as they do today. The same processes and reporting requirements will apply, the only change being the use of an XI prefix when trading under the Protocol. You will need to inform HMRC however to continue to use these simplification rules when you trade with the EC:

https://www.gov.uk/guidance/tell-hmrc-if-you-sell-goods-in-northern-ireland-or-move-goods-between-northern-ireland-and-the-eu-from-1-january-2021

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