The Windsor Framework - VAT and duty implications explained
The Windsor Framework - VAT and duty implications explained
Following Brexit, the Northern Ireland Protocol allowed certain goods to move from Great Britain to Northern Ireland tariff-free.
If a business can show that their goods will remain in Northern Ireland, they have access to a simplified process and will not be subject to tariffs, underpinned by the existing Trader Support Service. A process has also been put in place to allow refunds if there is no practical alternative to paying tariffs, if later it can be shown that goods have remained in Northern Ireland.
Also from 31 January, there were changes to the health certification needed for medium risk animal products, plants, plant products, and high-risk food and feed of non-animal origin from the EU.
Organisations moving goods between Great Britain and Northern Ireland should be aware of these changes as this is the first major milestone in the introduction of a full “green lane” between Great Britain and Northern Ireland.
The second milestone of the Windsor Framework is introduced from 30 April 2024. There will be documentary and risk-based identity and physical checks on medium-risk animal products, plants, plant products, and high-risk food and feed of non-animal origin from the EU. Additionally, inspections of high-risk plants/plant products from the EU will move from destination to Border Control Posts. In connection with the Border Control Posts, the Government has recently announced that charges (Common User Charges) will be imposed on checks for commercial movements of animal products, plants and plant products through the Port of Dover and Eurotunnel.
Also from 30 April 2024 there will be a simplification of imports from non-EU countries, including removal of health certification and routine checks on low-risk animal products, plants, plant products from non-EU countries.
From 30 September 2024, the full “green lane” will take effect for the movement of all goods between Great Britain and Northern Ireland, expanding the benefits of the UK Internal Market Scheme to end unnecessary bureaucracy. This will ensure that goods will no longer move on the basis of international customs requirements, with a new system based on commercial information.
New arrangements will also come into effect for the movement of parcels between Great Britain and Northern Ireland, with a new set of data-sharing requirements put in place to ensure that customs declarations are not needed for deliveries to consumers.
If you are a UK importer or exporter of record, you are responsible for ensuring that all your paperwork, proof of due diligence, origin, VAT, and duty payments are in order and filed ready for HMRC inspection. Failure to comply could result in delays to shipments as well as penalties and may affect your ability to apply for customs authorisations in the future.
The main changes introduced by the Windsor Framework to the Northern Ireland Protocol included:
We can offer direct declaration support using the either the CDS or TSS declaration systems - with no requirement for any IT implementation lead times or costs.
We can also help you to review historical movement of goods and identify where supplementary declarations are required to be submitted and support you in the submission process.
Speak to a customs expert
What is the Windsor Framework?
The Windsor Framework amended the Northern Ireland Protocol and introduced a new UK internal market system (aka a “green lane”). It expanded the number of businesses able to move goods tariff-free by allowing businesses throughout the UK to be eligible, increasing the turnover limit four-fold to £2m and allowing certain sectors to still be eligible over that limit.If a business can show that their goods will remain in Northern Ireland, they have access to a simplified process and will not be subject to tariffs, underpinned by the existing Trader Support Service. A process has also been put in place to allow refunds if there is no practical alternative to paying tariffs, if later it can be shown that goods have remained in Northern Ireland.
When did the Windsor Framework come into effect?
The first milestone of Windsor Framework was introduced from 31 January 2024. Goods moving directly to Great Britain from Ireland were subject to the full customs regime. Since Brexit there have been a series of waivers, but these have now ended, so businesses that import goods directly from Ireland need to be ready to avoid delays.Also from 31 January, there were changes to the health certification needed for medium risk animal products, plants, plant products, and high-risk food and feed of non-animal origin from the EU.
Organisations moving goods between Great Britain and Northern Ireland should be aware of these changes as this is the first major milestone in the introduction of a full “green lane” between Great Britain and Northern Ireland.
The second milestone of the Windsor Framework is introduced from 30 April 2024. There will be documentary and risk-based identity and physical checks on medium-risk animal products, plants, plant products, and high-risk food and feed of non-animal origin from the EU. Additionally, inspections of high-risk plants/plant products from the EU will move from destination to Border Control Posts. In connection with the Border Control Posts, the Government has recently announced that charges (Common User Charges) will be imposed on checks for commercial movements of animal products, plants and plant products through the Port of Dover and Eurotunnel.
Also from 30 April 2024 there will be a simplification of imports from non-EU countries, including removal of health certification and routine checks on low-risk animal products, plants, plant products from non-EU countries.
From 30 September 2024, the full “green lane” will take effect for the movement of all goods between Great Britain and Northern Ireland, expanding the benefits of the UK Internal Market Scheme to end unnecessary bureaucracy. This will ensure that goods will no longer move on the basis of international customs requirements, with a new system based on commercial information.
New arrangements will also come into effect for the movement of parcels between Great Britain and Northern Ireland, with a new set of data-sharing requirements put in place to ensure that customs declarations are not needed for deliveries to consumers.
Potential future changes
A policy paper, Safeguarding the Union, was published on 31 January 2024. This suggests there will be progression to fewer controls such as:- To broaden the new UK internal market system, replacing the ‘Green Lane’
- Ensuring no unnecessary checks and facilitating movements within the UK internal market system, including expanding the scope and scale of goods within the system.
VAT on supplies between Great Britain and Northern Ireland – the Windsor Framework explained:
In general terms, goods moving between Great Britain and Northern Ireland are exported and imported for VAT purposes. The way that VAT is accounted for on these imports and exports seeks to mirror domestic VAT accounting as far as possible. However, this accounting approach can be complex in certain circumstances.If you are a UK importer or exporter of record, you are responsible for ensuring that all your paperwork, proof of due diligence, origin, VAT, and duty payments are in order and filed ready for HMRC inspection. Failure to comply could result in delays to shipments as well as penalties and may affect your ability to apply for customs authorisations in the future.
The main changes introduced by the Windsor Framework to the Northern Ireland Protocol included:
- Removing the limit on the number of reduced and zero rates in Northern Ireland
- Allowing for flexibility on future rates
- Exempting Northern Ireland businesses from a range of EU rules
- Northern Ireland will not be required to apply the EU special scheme for distance sales of goods from Great Britain to Northern Ireland. VAT obligations for these transactions should be equivalent to the same transactions within Great Britain.
Border Target Operating Model
The Border Target Operating Model will be progressively introduced from the end of January 2024. This sets out the new approach to importing goods into Great Britain. See here for further details.Trader Support Service: Customs Declarations
The Trader Support Service (TSS) has now been in place for three years and it is planned to remain in place until the end of 2024 as a free to use service enabling businesses to submit customs, safety and security declarations. We expect it will get some form of replacement after 2024.How can we help?
For help and advice on any trade-related issues between GB and NI, please get in touch.We can offer direct declaration support using the either the CDS or TSS declaration systems - with no requirement for any IT implementation lead times or costs.
We can also help you to review historical movement of goods and identify where supplementary declarations are required to be submitted and support you in the submission process.
Speak to a customs expert