The government introduced the Taxation (Post-Transition Period) Bill into Parliament on 8 December 2020. The Bill aims to ensure the smooth continuation of business in 2021, particularly in relation to the implementation of the Northern Ireland (NI) Protocol regarding customs, VAT and excise issues.
Key provisions of the Bill include:
NI customs framework: The Bill will introduce the framework for customs duty charges on goods arriving in NI (from both Great Britain and rest of world countries), subject to conditions agreed under article 5 of the NI Protocol, as well as a customs duty charge for goods arriving in GB from NI that do not qualify for unfettered access to UK markets (non-qualifying NI goods), and goods moved to GB via NI for avoidance purposes. The provisions allow the government to make regulations to implement the outcome of Joint Committee negotiations in relation to goods to be considered as ‘at risk’ or ‘not at risk’ of onward movement to the EU.
NI VAT and excise elements: The Bill introduces changes required to implement the VAT and excise elements of the NI Protocol (article 8 and annex 3) including making a number of consequential changes. The rules for movements between NI and the EU will continue to apply, modified as necessary. Although the NI Protocol requires that movements between Great Britain and Northern Ireland are treated as though they are imports/exports, the Bill, together with any necessary secondary legislation, will use flexibilities in EU law to comply with this whilst minimising the practical changes for businesses and individuals. It will also put measures in place to protect VAT and excise revenues and ensure the continued efficient flow of goods between GB and NI.
VAT treatment of goods from overseas sellers and on imported goods: The Bill introduces a new model for the VAT treatment of goods arriving into the UK. The current VAT treatment for goods that are sold into the UK by overseas sellers is linked to EU rules; this link will remain for NI. Following the end of the transition period, the UK will implement a new model for the VAT treatment of goods arriving from overseas. The new treatment includes a number of changes, including:
the abolition of a relief from import VAT for consignments not exceeding £15 for goods arriving in Great Britain. LVCR will continue to apply in Northern Ireland. However, it will not apply to goods that are ordered remotely;
moving VAT collection away from the border for consignments not exceeding £135;
placing the responsibility to pay VAT onto either an overseas seller or an online marketplace, where they facilitate a sale or the UK recipient if they are VAT registered; and
the introduction of online marketplace liability for goods already in GB at the point of sale that are sold by an overseas business to a UK consumer, regardless of value.
changes to the VAT treatment of goods arriving into the UK. It amends the power to make regulations under which HMRC can issue liability notices to insured persons where an insurer fails to pay insurance premium tax due.
IPT liability notices: The Bill amends the power to make regulations under which HMRC can issue liability notices to insured persons where an insurer fails to pay insurance premium tax due.
CFC changes: The Billamends the controlled foreign companies (CFC) rules in TIOPA 2010 Part 9A. It introduces specific powers enabling HMRC to raise additional CFC tax charges for periods from 1 January 2013 to 31 December 2018, for the purposes of recovering state aid. It also enables HMRC to charge interest on any additional amounts of CFC tax at a compound rate. CFC charges raised under the new powers will be based on HMRC's view of the amount of state aid to be recovered. Taxpayers will have the usual rights of appeal against such charges, but they will not be able to postpone any of the tax charged. The tax charged will be due 30 days after the charge has been raised. The new powers allow HMRC to vary these CFC charges to take account of additional information received, for example in relation to any reliefs claimed by the taxpayer.
Following recent agreement with the EU on the Withdrawal Agreement, this Bill does not mirror the controversial clauses in the Internal Market Bill (see below).
The government introduced the Taxation (Post-Transition Period) Bill into Parliament on 8 December 2020. The Bill aims to ensure the smooth continuation of business in 2021, particularly in relation to the implementation of the Northern Ireland (NI) Protocol regarding customs, VAT and excise issues.
Key provisions of the Bill include:
NI customs framework: The Bill will introduce the framework for customs duty charges on goods arriving in NI (from both Great Britain and rest of world countries), subject to conditions agreed under article 5 of the NI Protocol, as well as a customs duty charge for goods arriving in GB from NI that do not qualify for unfettered access to UK markets (non-qualifying NI goods), and goods moved to GB via NI for avoidance purposes. The provisions allow the government to make regulations to implement the outcome of Joint Committee negotiations in relation to goods to be considered as ‘at risk’ or ‘not at risk’ of onward movement to the EU.
NI VAT and excise elements: The Bill introduces changes required to implement the VAT and excise elements of the NI Protocol (article 8 and annex 3) including making a number of consequential changes. The rules for movements between NI and the EU will continue to apply, modified as necessary. Although the NI Protocol requires that movements between Great Britain and Northern Ireland are treated as though they are imports/exports, the Bill, together with any necessary secondary legislation, will use flexibilities in EU law to comply with this whilst minimising the practical changes for businesses and individuals. It will also put measures in place to protect VAT and excise revenues and ensure the continued efficient flow of goods between GB and NI.
VAT treatment of goods from overseas sellers and on imported goods: The Bill introduces a new model for the VAT treatment of goods arriving into the UK. The current VAT treatment for goods that are sold into the UK by overseas sellers is linked to EU rules; this link will remain for NI. Following the end of the transition period, the UK will implement a new model for the VAT treatment of goods arriving from overseas. The new treatment includes a number of changes, including:
the abolition of a relief from import VAT for consignments not exceeding £15 for goods arriving in Great Britain. LVCR will continue to apply in Northern Ireland. However, it will not apply to goods that are ordered remotely;
moving VAT collection away from the border for consignments not exceeding £135;
placing the responsibility to pay VAT onto either an overseas seller or an online marketplace, where they facilitate a sale or the UK recipient if they are VAT registered; and
the introduction of online marketplace liability for goods already in GB at the point of sale that are sold by an overseas business to a UK consumer, regardless of value.
changes to the VAT treatment of goods arriving into the UK. It amends the power to make regulations under which HMRC can issue liability notices to insured persons where an insurer fails to pay insurance premium tax due.
IPT liability notices: The Bill amends the power to make regulations under which HMRC can issue liability notices to insured persons where an insurer fails to pay insurance premium tax due.
CFC changes: The Billamends the controlled foreign companies (CFC) rules in TIOPA 2010 Part 9A. It introduces specific powers enabling HMRC to raise additional CFC tax charges for periods from 1 January 2013 to 31 December 2018, for the purposes of recovering state aid. It also enables HMRC to charge interest on any additional amounts of CFC tax at a compound rate. CFC charges raised under the new powers will be based on HMRC's view of the amount of state aid to be recovered. Taxpayers will have the usual rights of appeal against such charges, but they will not be able to postpone any of the tax charged. The tax charged will be due 30 days after the charge has been raised. The new powers allow HMRC to vary these CFC charges to take account of additional information received, for example in relation to any reliefs claimed by the taxpayer.
Following recent agreement with the EU on the Withdrawal Agreement, this Bill does not mirror the controversial clauses in the Internal Market Bill (see below).
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