Farmers trading with Great Britain are facing challenges in 2021 due to the post-Brexit customs border in the Irish Sea. Meanwhile, dark clouds are gathering around the Northern Ireland Protocol.
Northern Ireland
Under the Protocol, NI effectively remains in the EU’s single market for goods which means that trade between Ireland and NI can continue as before. However, the current standoff between the UK Government and the EU means that farmers will need to keep a close watch on developments over the coming months.
Great Britain
At a practical level, post-Brexit transactions between Ireland and GB now involve considerable paperwork. This may put farmers off certain one-off transactions. Tractor sales, for example, require 24-hour pre-notification, customs declarations and, in the case of second-hand equipment, phytosanitary certification. These requirements also apply to the livestock trade.
UK LAND BRIDGE
If you use the UK land bridge to move livestock, you will need an EORI number. You must also register on the European Commission’s Trade Control and Expert System (TRACES), an online platform for completing the documentation required for imports of consignments from third countries and certain intra-community trade movements. In addition, you need an MRN (Movement Reference Number), and you must provide pre- boarding notification and complete health entry declarations and customs notifications.
While the requirements are slightly less burdensome when exporting livestock to GB, you need to be careful about the terms of supply and delivery. There is a risk of inadvertently taking responsibility for additional paperwork on the UK side of the transaction.
VAT
As GB is now deemed a ‘third country’ for trade with EU member states, VAT on imports must be calculated on the post-customs price and is payable at the point of entry. The impact of this on costs can be significant. The customs charge on a tractor, for example, could add €10,000 to the VAT-able price. In most cases, the VAT payment is due at the time of the transaction, the only exception being if you have registered for deferred accounting. Anyone with sales over £85,000 going into the UK will need to register for UK VAT. Information on the UK tax system is available from the HMRC website.
Pitfalls
The new trading environment has significant cash flow, cost and administrative implications for farmers trading with GB. Given the complexity, there will be inevitable pitfalls. If you are affected, seek advice from your local ifac office.