Since the Northern Ireland protocol became part of international law on January 1, 2021, importing goods into Northern Ireland has been complex and time-consuming for UK businesses. For many, the requirement to complete full customs declarations to enter goods into Northern Ireland resulted in the withdrawal of sales, due to the time and cost providing to be commercially unviable.
In an attempt to address these issues and streamline the import of goods, especially those subject to additional certification requirements, in February 2023 the UK and the EU announced changes to the Northern Ireland protocol, in the form of the new Windsor Framework, which is due to come into force in October this year. There are, however, some important changes to the UK Trader Scheme: Transitioning to the UK Internal Market Scheme (UKIMS) Under Windsor Framework that businesses need to be aware of.
HMRC are writing to all holders of the UK Trader Scheme (UKTS) authorisation to inform them that the existing UKTS will cease to exist from the September 30, 2023 and is being replaced by UKIMS. It is crucial to take immediate action to ensure timely approval under the new scheme.
While the information required for the original UKTS was relatively straightforward, the additional controls under the Windsor Framework have required HMRC to request additional information to ensure an applicant can comply with the new rules.
Notably, the revised requirements entail providing more detailed information on procedures and records to ensure there are satisfactory controls on the goods to minimise the risk of unauthorised movement into the European Union.
What is the Windsor Framework?
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.
The UKTS will be replaced by the new UKIMS. Only importers who have this 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, such as stating ‘not for EU’.
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 Northern Ireland 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.
Groupage loads are a common form of shipment into Northern Ireland 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 the Trusted Trader Scheme (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 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 five years).
- Ensure records on goods movements (into NI) 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.
- Ensure 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.
The implementation of the framework will be in phases as follows:
- June 2023 – Northern Ireland duty reimbursement scheme: From June 30 2023, the scheme allows traders moving goods into Northern Ireland to reclaim EU duty where they can demonstrate that the goods were sold or used in Northern Ireland or somewhere else outside the EU. Claims can be backdated to January 1, 2021).
- October 1, 2023 – UKIMS will replace UKTS and be required for declaring ‘not at risk’ on TSS. Enhanced SPS inspection facilities to be in place in NI. Prepacked meat and fresh dairy from GB to NI to be individually labelled ‘not for EU’.
- October 31, 2023 – Export health certificates and phytosanitary certificates are introduced for medium-risk animal products, plants and plant products imported to GB from the EU. This also applies to Irish products moving directly from Ireland to GB, and full customs controls will also be introduced for these goods.
- September 2024 – Green Channel will take full effect October 1, 2024 – Labelling requirement extends to all dairy products, including UHT milk and butter.
- December 31, 2024 – Businesses to start using the UK’s new product safety marking: UK Conformity Assessed (UKCA). The CE marking will continue to be recognised for goods sold in NI.
- 2025 – New arrangements for the supply of medicines into NI will be introduced at a date to be confirmed.
- July 1, 2025 – All retail goods (other than goods sold loose and certain exempt products), to be individually labelled.
At MHA, we appreciate that these new requirements will result in applicants needing to review and document existing processes. Our team of experts are available to assist your company in ensuring that it has the necessary records and controls, helping you avoid any potential penalties and assessments.