Exiting the European Union (Value Added Tax)

Jim Shannon Excerpts

Wednesday 3rd February 2021 Commons Chamber

[Jim Shannon (Strangford) (DUP)]

Thank you, Madam Deputy Speaker; that was a quick swap-over.

I want to express concern about something that my right hon. Friend the Member for East Antrim (Sammy Wilson) referred to: the confusion that clearly reigns in Northern Ireland in relation to VAT. I hold constituency surgeries every Saturday when I am back home. The one that I hold in Portavogie involves fishermen, and a fisherman recently came to me saying, “I can’t understand, Jim, what this VAT registration is to do with. I am already registered for VAT.” I said, “Well, I think this is probably to do with the EU, Brexit and where we stand.” He then phoned HMRC, but had real bother trying to get any clarification whatsoever; first he was waiting and then the line went dead. I have some concerns for the people—fishermen, but others as well—who really do not understand the EU VAT regime, the UK VAT regime or the implications for their businesses.

The Minister is always generous in responding to our questions, so perhaps he could clarify this matter for me and my constituents. Will he outline the position of Northern Ireland in relation to regulations 3 to 9 under “Amendment of Group 8 of Schedule 8 to the Value Added Tax Act 1994”, which make

“provision in connection with the United Kingdom’s exit from the EU”,

and mean that we find ourselves being taxed through VAT for goods, yet paying customs on parcels from the mainland? Let me give some quick examples; there are plenty, but I will just give two.

I have a constituent who gets leather from a company in Newcastle upon Tyne in the north of England. Indeed, I suspect that that might not be too far away from the hon. Member for North West Durham (Mr Holden). Orders usually come in about three parcels, each weighing about 20 kg to 30 kg. The courier price has gone up from precisely £13.50 to £16.50 plus VAT. But the new price for the product—the best the leather supplier can give—is an estimated minimum of £75 plus VAT, and other taxes that may be imposed by HMRC mean a cost of at least £90 inclusive per parcel. That is a real deviation and a problem for our constituents—an almost sixfold increase. The courier company says that most of the price increase is due to all the customs paperwork it now has to complete. Can we have some clarification from the Minister on the confusion that seems to reign?

I was speaking to another constituent yesterday, who every year orders items from a horse goods supplier across the water. She usually orders from one person, but this time she applied to four people. Two could not do it, one did not answer and the one who did answer said, “The product is £30, but we are going to have to add £42 for the VAT and service charges, so the cost will now be £72.” My constituent was able to go online and order the product from the United States of America at a comparable price to the original—around the £30 mark.

A further example—I think I said two, but there are actually three—is of a constituent who wanted to send a car part across from England. It needs to come on a pallet, weighing 50 kg. He was advised by the shipping agent that he would have to pay £45 plus VAT for customs clearance. The charge is more than the part is worth. This again highlights something that we need clarification on. He is absolutely astonished that this is the case within the United Kingdom, and so am I.

I hope I have caught this right in relation to the issue about VAT and suppliers—my right hon. Friend the Member for East Antrim referred to it as well—and that those who buy cement, wood, concrete, building blocks and so on from the Republic of Ireland can reclaim their VAT. If that is the case, that answers one of my queries in an earlier exchange on this matter, just before Christmas, I think it was. If that is sorted and the VAT repayment that my right hon. Friend referred to can be done quickly, urgently and on the timescale that it should be, that would be good news.

The statutory instrument extends zero VAT to certain sectors. I highlight the inadequacy of this SI, and through you, Madam Deputy Speaker, query whether the Minister agrees that this measure should be extended to all products coming into Northern Ireland from the rest of the UK in any form of haulage or transportation, in the light of the customs expectation, which sees products costing six times the price, post the Irish sea border. These are real issues that affect the pockets of my constituents, those of my right hon. Friend and indeed people across the whole of Northern Ireland. I urge the Minister to go back to the Cabinet and raise the fact that these SIs do not provide parity for Northern Ireland as an integral part of the United Kingdom, yet we pay tax and customs. Other steps must be urgently taken.

I have to express these concerns on behalf of my constituents. I am sorry to do so. I hope the Minister will give us the clarification we need. We are 34 days into the Northern Ireland protocol, and boy, is it hard to understand.