Brexit: UK and EU agree on major changes to the Northern Ireland Protocol (Windsor Framework)

30 March 2023

The UK and European Union governments formally adopted a new agreement that will mean major changes to the Northern Ireland Protocol. 

The protocol is part of the Brexit deal, which was put in place when the UK left the EU back in January 2021 and sets Northern Ireland's trade rules. It effectively keeps Northern Ireland inside both the EU's single market and the UK VAT and customs regime for the trade of goods.

This protocol currently keeps the Irish land border open between Southern and Northern Ireland but means products arriving in Northern Ireland from Great Britain are subject to checks and customs controls. These checks and custom controls are cumbersome and cause significant disruption to businesses that move goods into Northern Ireland from the rest of the UK.

The new deal, known as the Windsor Framework, is designed to make trade between Northern Ireland and Great Britain easier by significantly reducing the number of checks on goods arriving in Northern Ireland from Great Britain. It also allows the UK to have more power over tax rates set in the country.

It is hoped that the new deal will be introduced during the Autumn of 2023, and some of the main changes include:

Customs simplification - Green lanes and red lanes

The agreement will reduce custom checks by introducing the concept of green and red lanes for goods moving from Great Britain into Northern Ireland.

Effectively, British goods that are staying in Northern Ireland will use the green lane at Northern Ireland ports, meaning they face minimal paperwork and no routine physical checks. Goods that are set to travel into The Republic of Ireland and the wider EU will use the red lane, meaning they face strict customs processes and other checks at Northern Ireland ports.

To use the green lane, businesses will need to register as a trusted trader under the new United Kingdom Internal Market Scheme (UKIMS), and HMRC has already confirmed that supermarkets and other large businesses that are currently members of an existing scheme to get their goods into Northern Ireland will be automatically moved onto UKIMS.

The prospect of a ban on Great Britain food items in Northern Ireland has gone for good

The EU’s strict rules and processes for food products entering its single market meant that the trade in food products from Great Britain to Northern Ireland was significantly impacted due to Brexit.

Under the original terms of the protocol, food products from Great Britain that are deemed high risk by the EU, such as fresh sausages, could have faced a ban in Northern Ireland entirely.

The introduction of the Windsor Framework will mean that UK public health and safety standards will apply to all retail food and drink in the UK internal market, including food consumed in Northern Ireland. This means the prospect of a ban has been removed entirely.

As a result of these changes, traders will need to introduce new labelling for food sold and consumed in Northern Ireland. The new label will need to show "Not for EU” and will be introduced from October 2023 on prepacked meat and fresh milk. Labelling for other food products will be rolled out by July 2025. As this is likely to have a higher cost for food manufacturers, the UK government has confirmed it will provide financial support to help businesses affected.

Further progress on medicines

The EU previously acknowledged that the originally agreed protocol caused too much disruption to the supply of medicines to Northern Ireland, and even though it changed some of its laws to guarantee the supply of medicines from Great Britain to Northern Ireland, there was still major disruption.

The Windsor Framework tries to address these issues and will allow any drugs licenced in the UK to be used and sold for consumption in Northern Ireland.

Online shopping

Under the original Northern Ireland protocol, it was proposed that all parcels being sent from Great Britain suppliers to Northern Irish consumers would require the submission of a customs declaration. As most online shopping in Northern Ireland is fulfilled from Great Britain warehouses, this could have had a major impact, and even though a “grace period” meant that this part of the protocol was never implemented, it still caused some British e-commerce suppliers to give up on trading in Northern Ireland altogether.

The new framework effectively makes this grace period permanent, although there will be some additional requirements placed on logistics companies. For example, authorised parcel operators will now have to share data with the government to monitor and manage any risks of smuggling into the EU market. This is currently planned to be introduced by September 2024. 

Removal of seed and plant bans in Northern Ireland

Since the UK left the EU, the horticulture industry has felt significant effects due to new requirements for inspection and certification of plants being moved from Great Britain to Northern Ireland. 

This was due to these types of goods requiring full EU certification and meant that some products, such as seed potatoes, were banned from Northern Ireland entirely. 

The Windsor Framework allows all plants and seeds to move under the existing UK-wide plant passport scheme in line with traders throughout the UK. This means that bans on so-called "high-risk" trees, seeds and shrubs will be revoked.

VAT and alcohol duties

Currently, EU rules for VAT and excise are applied to goods sold and consumed in Northern Ireland, which means that certain UK tax changes that are not compatible with EU rules cannot be introduced in the country. 

This was highlighted when the UK cut the VAT rate on solar panels to zero in 2022 but could not apply this in Northern Ireland.
The Windsor Framework allows Northern Ireland to diverge from EU rules governing the structure of excise duties and VAT rates, and will mean that:

  • New UK plans focusing on excise tax being based on the alcoholic strength of beverages can be introduced in Northern Ireland.
  • The UK has the flexibility and scope to apply reduced VAT rates on a higher number of goods sold and consumed in Northern Ireland. 
  • The UK can now set its own VAT rates on goods that are supplied and installed in immovable property located in Northern Ireland (for example, a heat pump or solar panel)

Are you trading globally? Whether you require basic VAT advice or specific VAT compliance support, Fiscal Solutions can help. Our team of multi-lingual experts are knowledgeable in all the different VAT rules in Europe and around the world.

We help you simplify today’s complexities and address tomorrow’s challenges. The values we represent, and our consistent advice, mean you can trust Fiscal Solutions to do the right thing – for you and your organisation.

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