UK Internal Market Scheme: Key Facts on the Replacement of UK Trader Scheme with UKIMS

What is the Windsor Framework?

Red and green channels

The framework envisages two ‘lanes’ for goods arriving in Northern Ireland – a green lane for goods that will remain in Northern Ireland and therefore not require checks and additional paperwork; and a red lane for goods that may be sent on to the EU, which would still be subject to certain checks.

These changes have been warmly welcomed by many as an appropriate means of managing the flow of goods between Northern Ireland and mainland UK without excessive checks, however there are still a number of planning points businesses need to be aware of.

1. The UK Trader Scheme (UKTS) will be replaced by the new UK Internal Market Scheme (UKIMS). Only importers who have this authorisation will be able to use the Green Channel.
2. Goods entered via the Green Channel must only be for use in Northern Ireland and may need to meet additional labelling requirements, such as stating ‘not for EU’.
3. Any goods that are ‘at risk’ of entering the EU will have to be moved through the Red Channel and be subject to the existing measures under the NI Protocol such as full certification and customs declaration via TSS.
4. 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.
5. 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 be prepared for, as it involves 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 otherwise 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.