Customs Tariff (Establishment) (EU Exit) (Amendment) (No. 2) Regulations 2021 Value Added Tax (Miscellaneous Amendments and Repeals) (EU Exit) Regulations 2021

James Murray Excerpts

Monday 19th July 2021 General Committees

[James Murray (Ealing North) (Lab/Co-op)]

Thank you, Mr Hollobone, for the opportunity to respond on behalf of the Opposition as we consider these two statutory instruments.

The Value Added Tax (Miscellaneous Amendments and Repeals) (EU Exit) Regulations 2021 make a number of changes to EU exit VAT legislation that was commenced at the end of the transition period, following the UK’s exit from the EU. As set out in the explanatory notes, a review of EU exit VAT legislation identified a number of errors and omissions that need to be corrected to ensure that the VAT system continues to operate as required. They include minor changes to address missing or superfluous words, incorrect cross-references or formatting errors, for example. The instrument makes those corrections in relation to primary legislation.

Specifically, we understand that the instrument seeks to remove an inadvertent extension of the zero rate for the services—which are not covered by the Northern Ireland Protocol—of transport, handling and storage of imported and exported goods to movements of goods between Northern Ireland and Great Britain. We understand that the instrument deems that a movement of own goods from Great Britain to Northern Ireland that are wholly or partly for non-business purposes is treated as a zero-rated supply. This approach means that VAT on the original purchase can be recovered, preventing double taxation through the business incurring two irrecoverable VAT charges—one on the original purchase and one on the movement into Northern Ireland.

The instrument makes further amendments to ensure the correct taxation of goods supplied from the EU to Great Britain that are transported via Northern Ireland. It does so by providing for the treatment of supplies of low-value imported goods—those sent in consignments valued at £135 or under—sold by businesses to customers in Great Britain. That provision relieves the import VAT due on the removal of the goods to the UK and instead provides that the place of supply of those goods is the UK. The instrument also makes the business, or an online marketplace if it facilitated the sale, responsible for accounting for VAT on that supply. Finally, the regulations also make minor changes to the Value Added Tax Act 1994 by repealing sections that have been made redundant by a change in policy.

We will not oppose this instrument. It is of course important that goods are appropriately taxed, that the appropriate regulations cover trade between Great Britain and Northern Ireland, that no business faces double taxation, and that our country’s legislation is clear and correct. However, this Committee is being asked to correct mistakes and oversights, and to properly hold the Government to account, we need to understand the impact of those mistakes and oversights. The explanatory notes make it clear that the changes that we are being asked to consider have

“no, or no significant, impact on business, charities or voluntary bodies.”

However, that is not quite the same as confirming that the errors themselves have had no, or no significant, impact. I would therefore be grateful if the Minister set out what impact each of the unintended errors in legislation has had.

The Customs Tariff (Establishment) (EU Exit) (Amendment) (No. 2) Regulations 2021 correct typographical errors and add commodity codes and duty rates for a small number of goods in the tariff of the United Kingdom. By amending the establishment regulations—part of the legislation to ensure that the UK’s customs, VAT and excise regimes were in place at the end of the implementation period—this instrument gives legal effect to an updated tariff reference document. We will of course not oppose minor changes to the commodity codes on two chemical compounds used for manufacturing, a subset of vulcanised rubber gaskets, and certain types of tropical fruit. However, this is not the first time we have been asked to sit in this room and correct errors in the tariff reference document. The explanatory notes state:

“There is no, or no significant, impact on business, charities or voluntary bodies.”

As with the other SI before us, that is not quite the same as confirming that the errors themselves have had no effect. I would be grateful if the Minister set out what impact these errors have had.

I am also conscious that, with repeated errors to the same tariff document being corrected, we need to know what the cumulative impact is of all the errors that have been made. Individual corrections or small sets of corrections might have no significant impact, but we do not know whether the same is true cumulatively of all the corrections that we have been asked to make over many months. I would therefore be grateful if the Minister made a commitment that, if we are asked to make further corrections to the tariff reference document, he will ensure that the explanatory notes include an assessment of the impact of all corrections made since its adoption.