UK-EU Withdrawal Agreement

Lord Morrow Excerpts

Thursday 10th December 2020 Lords Chamber

[Lord True (Con)]

My Lords, the movement of chemicals brings particular complexities, as the noble Lord rightly points out, but the Government are committing an enormous amount of resource to the support of Northern Ireland businesses in terms of the movement of goods. That had already been announced. Indeed, I was criticised by the noble Baroness opposite for the scale of support the Government are giving to Northern Ireland and to business generally in confronting the new regime.

[Lord Morrow (DUP) [V]]

Under Article 8 of the Northern Ireland protocol, Northern Ireland will remain part of the EU VAT regime as well as being subject to the UK VAT rules. In practice, that will increase the amount of debt that businesses in Northern Ireland have to collect, which will in some cases lead to higher payments, with a knock-on effect for the consumer. For those in the second-hand car sales trade, the threat is particularly grave. Cars brought in from GB will now have VAT imposed on the full value rather than on the profits made on the sale. Can the Minister tell us why this disruption to the UK internal market was not prioritised in negotiations and why there is no mention of relief for affected businesses in his Statement? Can he outline what unilateral support the Government will provide to small and medium-sized businesses caught by these damaging rules?

[Lord True (Con)]

My Lords, I repeat the very substantial announcements of financial support for Northern Ireland and Northern Ireland business that I referred to in earlier responses. On VAT, as part of implementing the VAT elements of the Northern Ireland protocol, the UK and the EU Commission have needed to agree how EU VAT rules will apply in the unique circumstances created in Northern Ireland, where traders will continue to be part of both the UK and the EU system. That agreement has been reached and is laid out in the Statement. Further guidance on these topics is being published for traders.

We have heard a concern raised about the application of EU second-hand margin schemes. Obviously, these changes will not affect stock bought in advance of 1 January, even if it is sold later, but we acknowledge that this is not a long-lasting solution to these issues. We aim to minimise disruption for Northern Ireland traders to the extent possible, and we continue to explore options.