The relaxation of trading rules announced in the Windsor Framework has been welcomed by many.
Whilst the framework has to be accepted by the Joint EU committee along with the respective governments, its ratification will mean that UK businesses need to prepare for new processes in the next 6 months.
Red and green channels
Importing goods into Northern Ireland has been complex and time-consuming for UK businesses. For many GB-based businesses, the fact that they have to complete full customs declarations to enter goods into Northern Ireland has resulted in the withdrawal of sales as the time and cost have proved commercially unviable. The proposed changes to the import processes look to streamline the import of goods, especially those subject to additional certification requirements, but there are still potential concerns that UK businesses need to be aware of.
- Only importers who have a UK Trader Scheme (UKTS) authorisation will be able to use the Green Channel.
- Goods entered via the Green Channel must only be for use in Northern Ireland and may need to meet additional labelling requirements (e.g. for Retail/Supermarket)
- Any goods that are ‘at risk’ of entering the EU will have to be moved through the Red Channel and incur the existing measures under the NI Protocol such as full certification and customs declaration via TSS.
- Entry via the Green Channel allows for goods, subject to SPS certification, to enter under the cover of a General Certificate issued by the UK authorities.
- Any goods that are ‘at risk’ of entering the EU will have to be moved through the Red Channel and incur the existing measures under the NI Protocol such as full certification and customs declaration via TSS.
- Groupage Loads are a common form of shipment into NI and this will determine the effectiveness of the Channel system as any load which contains goods that may be ‘at risk’ of entering the EU will result in the whole consignment being moved through the Red Channel
Enhanced UK Trusted Trader Scheme
This is the key measure announced which facilitates the relaxation of rules and one which all businesses trading with Northern Ireland must concentrate on during the next few months as it will involve new processes and enhanced diligence.
HMRC carried out an exercise in late-2022 to contact UK businesses who had declared goods, via TSS, stating ‘not at risk’ and therefore waiving the requirement to pay EU customs duties. As a result, UK businesses who ‘import’ into Northern Ireland and are within the existing UK Trader Scheme (“UKTS”) should automatically have the required authorisation needed to use the Green Channel for goods that are ‘not at risk’ of entering the EU.
However, within the Framework, there are additional obligations on the UKTS holder to ensure that they:
- Demonstrate adequate record keeping in relation to the movement of the goods (which must be retained for at least 5 years).
- Records on goods movements (into NI) should allow for cross-checks between records relating to purchases, sales, stock control and movement of the goods.
- Maintain an understanding of their clients to ensure that the criteria within the UKTS can be met. This will be via contracts, declarations and evidence of sales and will require regular reviews.
- Require that a responsible person has a clear understanding of the administration of the UKTS and the obligations for sending goods to NI.
- The UK will, as part of the new data-sharing agreement, be required to audit UKTS holders and report to the EU that satisfactory controls are in place. UKTS holders must have the necessary records and knowledge in place otherw ise they could be subject to both EU customs duties and penalties. The EU has made it clear that failure to implement UKTS can result in this vital part of the Framework being withdrawn so it is crucial that this is successful.
HMRC carried out an exercise in late-2022 to contact UK businesses who had declared goods, via TSS, stating ‘not at risk’ and therefore waiving the requirement to pay EU customs duties.
