It looks as if the new procedures post Brexit as regards to customs will lead to further levels of bureaucracy and more tax payments in order to keep within European Union Law.
Dual VAT Regime To Come Into Force
The new system is likely to require businesses in Northern Ireland to enter a complicated dual-VAT regime, which means they will have to collect the sales tax on behalf of both the UK Treasury and European Union tax authorities, which seems to be grossly unfair. This new protocol will mean that UK authorities will apply EU customs rules to goods entering Northern Ireland.
A Downing Street spokewoman was asked by inews if she could confirm these new arrangements and she said that:
“The Northern Ireland protocol recognises that Northern Ireland is, and will remain, part of the UK’s VAT system and the UK single market. The UK Government has consistently made clear its focus on implementing the VAT requirements of the Protocol in a way that avoids disruption for traders in Northern Ireland.
Maintaining Alignment With The EU VAT Rule For Goods
“Northern Ireland will maintain alignment with the EU VAT rules for goods, including on goods moving to, from and within Northern Ireland, but HMRC will continue to be responsible for the operation of VAT and collection of the revenues in Northern Ireland.”
Speaking on this issue, also in inews, Alex Altmann, a partner at tax and advisory firm Blick Rothenberg claimed:
“We now know how these special rules will work in practice from next year and it is madness for business,” Mr Altmann added. “Northern Irish businesses will be required to operate a dual VAT and customs system.
“Sales to Ireland must follow the EU VAT and Customs rules and might require a Northern Irish business to collect EU VAT, which is then collected by HMRC. Sales from Northern Ireland to the rest of the UK are treated as exports, but might still require charging UK VAT. How to report these transactions are not clear at this stage.
Extremely Complicated Dual Reporting System
“The Northern Irish business community has been hit hard by the economic impact of the coronavirus pandemic. Now they are facing the incredible difficult task to operate this extremely complicated dual reporting system from January next year.”
This is certainly not great news for a huge number of businesses in Northern Ireland. If you require any help or advice on these new regulations that will shortly come into force, or you need help with any other accountancy related matter, get in touch with WHR Accountants by calling us on 028 3752 2909.