Michael McGrath (Cork South Central, Fianna Fail) | Oireachtas source

Since the UK left the EU Single Market and customs union, from 1 January 2021, the movement of goods from Great Britain into the EU is an importation from a third country and, in accordance with the terms of the withdrawal agreement, such goods must be declared to customs and are liable to customs duty, if applicable, and VAT at import.

However, the EU-UK Trade and Cooperation Agreement eliminated tariff duties for trade between the EU and Great Britain where the relevant rules of origin are met. This means that if vehicles are imported which are of UK origin then a 0% duty applies, whereas duty of 10% applies to vehicles which are not of UK origin.

Under the terms of the protocol on Ireland-Northern Ireland, the movement of goods between Northern Ireland and the EU is effectively regarded as a movement within the EU. However, a particular issue has existed with regard to used cars, known as margin scheme cars, following a significant change that the UK unilaterally made in January 2021, which impacted considerably on the application of the withdrawal agreement and the protocol. The UK asked the Commission for a permanent derogation from the VAT directive to allow it to operate the scheme, but the Commission refused on the basis that the margin scheme cannot be applied on sales in Northern Ireland of second-hand cars imported from any third country, including Great Britain, and would result in opportunities for significant abuse.

To counteract the tax avoidance opportunities this presented, Revenue revised its published guidance in February 2021 indicating that used cars imported from Great Britain into Northern Ireland after 31 December 2020 could only be subsequently imported into the State and re-registered here after they were declared to customs and if customs duty, if applicable, and VAT at import were paid. This ensured that the cars were liable for VAT and duty on the same basis as used cars brought into the State directly from Great Britain. It was made clear that the approach was temporary in nature, pending a resolution to the issue between the UK and the European Commission.

The Ceann Comhairle might bear with me because I am almost finished.

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