When the UK leaves the EU, it will become a third country from a customs perspective and the free circulation and free movement of goods between the EU and the UK will end. This will increase substantially the number of businesses that will have to complete customs formalities and other related obligations for trade with the UK and through the UK landbridge to the EU. This will present a significant challenge for many of those businesses which, up to now, have not had any experience of third country trade and customs formalities.
I am advised by Revenue that a priority for it is to facilitate the efficient movement of legitimate trade in the new trading environment. It has undertaken an extensive trader programme and has written to all businesses that trade with the UK, highlighting the Brexit-related Revenue supports available to them, and it has invited them to a series of Brexit seminars where it outlined customs procedures and the steps that businesses should be taking to prepare for Brexit.
Revenue’s focus to date has been on east-west trade with the UK. As the Deputy will know, the Government has made it clear it is committed to avoiding the return of a hard border on the island of Ireland. In the event of no deal, there will be intensive discussions between the Government, the European Commission and EU partners regarding the customs formalities necessary for the movement of goods north to south.
In regard to VAT, under existing rules, when the UK becomes a third country, VAT on import will be chargeable at the point of importation unless the importer is approved to use the current deferred payment system, which allows approved traders to defer payment of certain charges, including customs and VAT at import, until the 15th of the month following importation.
I have included a measure in the Withdrawal of the United Kingdom from the European Union (Consequential Provisions) Bill 2019 to allow for postponed accounting for import VAT. This is being introduced to alleviate the immediate cash flow burden for Irish traders arising from Brexit. Under this system, importers will not pay import VAT at the point of entry but will instead account for import VAT through their bimonthly VAT return.