Taxation (Post-transition Period) Bill

Lord Bhatia Excerpts

2nd reading & Committee negatived & 3rd reading & 2nd reading (Hansard) & 2nd reading (Hansard): House of Lords & 3rd reading (Hansard) & 3rd reading (Hansard): House of Lords & Committee negatived (Hansard) & Committee negatived (Hansard): House of Lords
Wednesday 16th December 2020 Lords Chamber

[Lord Bhatia (Non-Afl) [V]]

My Lords, this Bill will implement customs, VAT and excise obligations arising under the Northern Ireland protocol. The terms of the withdrawal agreement and the Ireland/Northern Ireland protocol create a unique status for Northern Ireland. It remains part of the UK’s customs territory but will continue to apply the EU’s customs code, VAT rules and single market rules for goods after the transition period, which ends on 31 December 2020. The Government are legislating in the United Kingdom Internal Market Bill to ensure that qualifying Northern Ireland goods have unfettered access to the UK internal market.

Article 8 of the protocol deals with EU VAT and excise provisions relating to goods that will continue to apply in Northern Ireland. However, HMRC will continue to be responsible for the operation and collection of the revenues that will not be passed on to the EU as VAT exemptions and reduced rates applying to Northern Ireland.

Clause 3 of the Bill amends the Value Added Tax Act 1994 to implement the obligation under the protocol. HMRC and the Treasury have explained that these provisions will ensure that the movement of goods between Great Britain and the Isle of Man and Northern Ireland will be treated as imports and exports. However, co-ordinating mechanisms will ensure that, as far as possible, VAT will be accounted for by businesses and individuals as it is today.

The Government have said that they will follow the UKIM Bill to make it clear that no tariffs will be payable on goods moving from Great Britain to Northern Ireland unless those goods are re-destined for the EU market or there is a genuine and substantial risk of them ending up there. The Government should not forget that the UK has signed an international agreement on Northern Ireland, which is part of the UK. Any breach of this agreement would damage the UK’s reputation internationally. It would also lead to the break-up of the United Kingdom.