What the Northern Ireland protocol extension for “chilled meats” means for British businesses

It was revealed last week that an extension to the Northern Ireland Protocol grace period for chilled meats had been agreed upon.

But what does this mean for businesses exporting goods to Northern Ireland?

Here’s what you need to know.

What is the grace period for chilled meats?

As part of the Withdrawal Agreement and Northern Ireland Protocol, British businesses were given a grace period to prepare products in line with European Union (EU) food standards.

But the grace period was set to end on 30 June 2021, meaning businesses would have been prohibited to move chilled meats – such as sausages, chicken nuggets, mince, and pies – to Northern Ireland. This is because chilled meat products are generally not permitted for import from non-member states.

How long has the grace period been extended?

Due to the impact of the coronavirus pandemic, the grace period has now been extended until 30 September 2021 – giving British suppliers and UK regulators more time to align with EU standards, such as product-level labelling.

Crucially, the extension does not require rules in the rest of the UK to align with future changes in EU “agrifood rules”.

What has the Government said?

The Government said businesses will continue to be supported while permanent solutions are considered.

“This is a positive first step but we still need to agree a permanent solution – Northern Ireland is an integral part of the United Kingdom and its consumers should be able to enjoy products they have bought from Great Britain for years,” said Cabinet Minister Lord Frost.

He added: “The chilled meats issue is only one of a very large number of problems with the way the Protocol is currently operating, and solutions need to be found with the EU to ensure it delivers on its original aims: to protect the Belfast (Good Friday) Agreement, safeguard Northern Ireland’s place in the United Kingdom, and protect the EU’s single market for goods.”

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Subsidy Control Bill set to replace “bureaucratic” EU State Aid regime

New State Aid rules will eliminate red tape and give British businesses greater access to financial support, the Government has revealed.

The report comes after the Subsidy Control Bill was introduced to Parliament on 30 June 2021.

According to the Department for Business, Energy & Industrial Strategy (BEIS), the new laws will replace the EU’s “bureaucratic” State Aid regime, which has been described by critics, such as the Confederation of British Industry (CBI), as slow, rigid, and prohibitive.

Under the EU initiative, all subsidies – except those under a Block Exemption Regulation – have to undergo a “lengthy bureaucratic process of being notified to and approved by the European Commission in advance” – resulting in lengthy delays and unnecessary compliance costs.

But the Government says Britain’s new independent subsidy control system will swiftly deliver financial support – such as a cash payment, a loan with interest below the market rate, or a guarantee – to businesses “without facing excessive red tape”, while also “delivering good value for the British taxpayer”.

The new regime, however, will not mirror the “1970s” approach of Government “trying to run the economy”, with companies succeeding solely through the support of financial subsidies.

The report also reveals that subsidies will not be awarded where there is a risk that jobs and economic activity could be relocated from one part of the country to another – known as displacement.

Commenting on the new regime, UK Business Secretary Kwasi Kwarteng said Britain is “seizing the opportunities of being an independent trading nation”.

“While the UK’s new system will be more agile and flexible, I have been clear that we will not return to the failed 1970s approach of the Government trying to run the economy, picking winners or bailing out unsustainable companies. Every subsidy must deliver strong benefits for local communities and ensure good value for money for the British taxpayer.”

He added: “Today’s Bill marks a clear departure from the EU State aid regime and will ensure our new subsidy system will maintain the UK’s competitive, free market economy that has been central to our economic success and national prosperity for decades.”

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Brexit and international trading problems

Since the transition period ended in 2020, UK businesses have been forced to adjust to the significant change in the international trading environment brought on by Brexit – which has been further complicated by the challenges of the Covid-19 pandemic.

Now more than a year on, businesses continue to face problems with supply chains and customs, that continue to delay goods and increase costs.

This has had a wider impact on the UK economy, including an increase in the cost of sourcing components and increased paperwork, resulting in higher costs and longer transportation times.

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UK and Spain set to review Gibraltar tax residency agreement

The UK and Spain are set to review how residents and companies based in Gibraltar are treated for tax purposes in a bid to tackle tax avoidance, it has been announced.

It comes after the Joint Coordinating Committee and Liaison Body met last month to discuss tax co-operation between the authorities of Spain and Gibraltar, resulting in the International Agreement on Taxation and the Protection of Financial Interests regarding Gibraltar.

If you or your company has interests in either territory, here’s what you need to know.

What will the review look at?

According to reports, the review will largely look at tax co-operation between the authorities of Spain and Gibraltar, the tax residence criteria for people and companies, and new procedures for administrative cooperation.

Who will the new rules affect?

The new rules will affect taxpayers who have interests in both jurisdictions, such as those registered in Spain but have property or work in Gibraltar, or vice versa. This could have significant tax implications for those living in Gibraltar but are determined to be a tax resident in Spain.

According to the International Agreement, conflicts may arise when persons meet any of the following criteria:

  • The person spends more than 183 overnight stays in Spanish territory;
  • The spouse – or partner in a similar relationship – and/or economically dependent ascendants and descendants, have their habitual residence in Spain;
  • The individual’s only permanent home is in Spain; or
  • At least two-thirds of the individual’s net assets are located in Spain.

In addition, Spanish nationals who transferred their residence to Gibraltar after 4 March 2019 will only be considered a tax resident in Spain.

Rules for companies

The review will also affect companies incorporated and managed in Gibraltar, where any of the following apply:

  • Most of their assets are located, or most of their rights are enforceable, in Spanish territory;
  • Most of their income is Spanish-sourced;
  • Most of the people in charge of effective management are tax residents in Spain; or
  • Residents of Spain politically or financially control the company, entity, or other legal form.

Provisions to take effect from the start of the next tax year

The provisions agreed in the international agreement will not come into effect until the next tax year. This means 1 July 2021 for Gibraltar and 1 January 2022 for Spain.

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Less than one month left to apply to SME Brexit Support Fund, businesses reminded

There is less than one month remaining to claim grant funding through the SME Brexit Support Fund, businesses have been reminded.

The initiative – which helps new and established businesses adapt to post-Brexit importing and exporting processes – will close to new applications on 30 June 2021.

If you need help trading overseas, here’s what you need to know.

What is the SME Brexit Support Fund?

Launched in response to Brexit, the grant funding scheme enables traders to access specialist training to help them adapt to new customs and tax processes, such as the rules of origin and VAT.

According to recent research, the vast majority of small businesses who trade overseas only do so with the EU, meaning many are unfamiliar with the complex international trading rules introduced at the end of the transition period.

How much can I get?

Traders who currently trade with the EU, or plan to do so in the future, can access up to £2,000 in grant funding. The cash can be used to pay for specialist training and professional advice – including accountant’s fees.

Who is eligible for support?

Eligible businesses will have been established in the UK for at least 12 months before applying, or currently hold Authorised Economic Operator status, and:

  • not have previously failed to meet its tax or customs obligations
  • have no more than 500 employees
  • have no more than £100 million turnover; and
  • import or export goods between Great Britain and the EU, or move goods between Great Britain and Northern Ireland.

The business should also:

  • complete (or intend to complete) import or export declarations internally for its own goods

OR

  • use someone else to complete import or export declarations but requires additional capability internally to effectively import or export (such as advice on rules of origin or advice on dealing with a supply chain).

When is the deadline?

The final deadline for applications is 30 June 2021, but the Institute of Chartered Accountants in England and Wales (ICAEW) has urged businesses to apply as soon as possible. This is because there is a limited amount of grant funding available.

How do I apply?

For more information about the application process, please click here.

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Just one month left to apply to EU Settlement Scheme: what employers need to know

EU workers have just one month left to apply to the EU Settlement Scheme to secure the right to live and work in the UK.

If you employ EU nationals, here’s what you need to know.

What is the EU Settlement Scheme?

European Union, European Economic Area (EEA), and Swiss citizens who lived and/or worked in the UK before the end of the transition period will be offered permanent residence, providing they meet the relevant criteria to stay.

The application process is free, but applicants must demonstrate that they are in the UK as a worker, student, or self-sufficient person. They are also required to provide a form of official ID (such as a passport or driver’s licence) and their National Insurance (NI) number, if they have one.

Workers who have lived in the UK for at least five years can apply for “settled status”, while those who have lived in the UK for less than five years can only apply for “pre-settled status”.

When is the deadline?

The scheme will close to new applications on 30 June 2021. If EU workers do not apply by that time, they may be forced to return to their country of nationality.

What do I need to do as an employer?

Employers should ensure that eligible workers are aware of the scheme and the consequences of not applying in time. You should encourage your employees to apply as soon as possible to avoid uncertainty and offer assistance where possible.

After 30 June 2021, a new digital system will be launched to help employers check proof of settled status. If you continue to employ a worker who has not received settled status, your business may be fined.

Where can I get more information?

To learn more about the EU Settlement Scheme, please click here.

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How will the EU’s Import One-Stop Shop impact traders in the UK?

The Import One-Stop Shop (IOSS) is set to come into force this summer under sweeping changes to EU VAT law. If your business supplies goods to consumers in the single market, this is what you need to know.

What is the Import One-Stop Shop?

The IOSS is a new electronic portal that can be used by businesses from 1 July 2021 to comply with their VAT e-commerce obligations on distance sales of imported goods.

It comes as the EU abolishes the rules waiving import VAT on commercial goods of a value up to €22, meaning all commercial goods imported into the EU from a third country or third territory will be subject to VAT irrespective of their value.

The IOSS can be used for business to consumer (B2C) sales where the goods are valued at €150 (£135) or less.

What are the benefits of the IOSS?

The new service will allow suppliers selling imported goods to buyers in the EU to collect, declare and pay VAT to the tax authorities in one single location.

Under current legislation, the buyer must pay VAT the moment the goods are imported into the EU.

It means that the buyer will not be faced with surprise fees when the goods are delivered.

How will the new rules impact UK traders?

At present, UK businesses (except those in Northern Ireland) selling physical goods to consumers in the EU must register for VAT in the Member State the goods are being imported. This creates considerable administrative challenges and limits international sales growth.

But from 1 July 2021, traders can register with the IOSS in a single Member State and be covered in the whole of the EU – much like the existing Mini One-Stop-Shop (MOSS) for B2C digital services.

Businesses in Northern Ireland remain subject to EU VAT law under the terms of the Withdrawal Agreement.

According to the EU tax authorities, the changes could save businesses up to €2.3 billion (£1.9 billion) a year in compliance costs.

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What you need to know about the new EU VAT e-commerce rules

The new European Union cross-border VAT e-commerce rules are set to come into force on 1 July 2021.

If you move or supply goods to the EU or Northern Ireland, here’s what you need to know.

What are the new e-commerce rules?

The new regulations are designed to make life “simpler and fairer” for traders. In reality, this means addressing barriers to “cross-border online sales” and challenges “arising from VAT regimes for distance sales of goods” and for the “importation of low value consignments”.

What’s changing?

According to the EU tax authority, the main changes – set to come into force from 1 July 2021 – are as follows:

  • Online sellers, including online marketplaces and platforms, will need to register in one EU Member State and this will be valid for the declaration and payment of VAT on all distance sales of goods and cross-border supplies of services to customers within the EU.
  • The existing thresholds for distance sales of goods within the EU will be abolished and replaced by a new EU-wide threshold of €10,000.
  • Below this €10,000 threshold, the supplies of telecommunications, broadcasting and electronic (TBE) services and distance sales of goods within the EU may remain subject to VAT in the Member State where the taxable person is established.
  • Special provisions will be introduced whereby online marketplaces and platforms facilitating supplies of goods are deemed for VAT purposes to have received and supplied the goods themselves – known as the “deemed supplier”.
  • New record keeping requirements will be introduced for online marketplaces and platforms facilitating supplies of goods and services, including where such online marketplaces or platforms are not a deemed supplier.
  • A new special scheme for distance sales of low value goods imported from third territories or third countries will be created – known as the Import One Stop Shop (IOSS).
  • The VAT exemption at importation of small consignments of a value up to €22 will be removed. This means all goods imported in the EU will now be subject to VAT, but simplification measures for distance sales of imported goods in consignments not exceeding €150 will be introduced, in cases where the IOSS is not used for imports.

Who will be affected?

The EU tax authority says everyone in the e-commerce supply chain will be affected by the new rules. This includes online sellers and e-commerce marketplaces both inside and outside the EU, as well as postal operators, couriers, customs and tax authorities, and even consumers.

What are the benefits of the new system?

The EU says the reforms alone could save businesses up to 95 per cent, or up to €2.3 billion (£1.9 billion) a year, in compliance costs.

Where can I learn more about the new rules?

The official EU guide can be found here. HM Revenue & Customs (HMRC) has also published guidance on the new rules here.

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