UK Internal Market Scheme – Your questions answered.

In February 2023, the UK government and the EU reached an agreement known as the Windsor Framework. This agreement introduced the UK Internal Market Scheme, replacing the previous UK Trader Scheme. The UK Trader Scheme aimed to facilitate tariff-free movement of goods between Great Britain and Northern Ireland within the UK's customs territory.

What are the differences between the UK Internal Market Scheme and the UK Trader Scheme?The UK Trader Scheme aimed to support businesses transporting goods between Great Britain and Northern Ireland, ensuring they are not subject to tariffs when moving goods from Great Britain to Northern Ireland within the UK customs territory. The new UK Internal Market Scheme is an enhanced trusted trader program that expands eligibility for businesses moving goods into Northern Ireland, specifically those deemed 'not at risk' of entering the EU. The previous UK Trader Scheme was only available for all UK businesses provided they used indirect customs representative; this included the Trader Support Scheme. Additionally, the scheme introduces a new green lane, which exempts goods passing through it from the standard procedures for entering Northern Ireland. Instead, only a simplified dataset based on commercial information needs to be submitted.

Furthermore, there are changes to the rules for goods subject to commercial processing in Northern Ireland. The turnover threshold for being able to declare goods ‘not at risk’ has been increased from less than £500k, to less than £2m, or that it falls under one of the exempted criteria: 

• Construction
• Healthcare
• Not for profit
• Animal Feed
• Food

The rules have been expanded to allow exemption, even if the goods are subject to one of these criteria, excluding food, and sold on to one subsequent entity. For example, you could import animal feed that will be sold on to a farmer, provided the farmer is the final entity in the supply chain and will use the animal feed in Northern Ireland.

What are ‘not at risk’ goods?Certain goods undergoing commercial processing may not meet the requirements to be classified as 'not at risk' and will automatically be considered 'at risk', requiring the payment of EU duty. However, goods not automatically 'at risk' can be declared as 'not at risk' if they meet the conditions based on applicable duties or under the UK Internal Market Scheme (UKIMS) or the UK Trader Scheme. Goods brought from Great Britain into Northern Ireland are treated as 'not at risk' if the EU duty is zero unless they undergo processing without meeting the additional requirements.

Who can benefit from the scheme?If you bring goods into Northern Ireland from the UK, you will need to apply for authorisation for the UK Internal Market Scheme in order to demonstrate that the goods are not at risk of moving to the EU. ‘Not at risk’ goods will not be charged duty if entering Northern Ireland from Great Britain but will be charged UK duty if entering Northern Ireland from outside the EU and the UK.

When can I apply?If you want to join the UK Internal Market Scheme, you will need to apply online. The portal for making applications is open now. Authorisation of the UK Internal Market will also give traders access to the green lane when it opens in 2024. If you’re already authorised under the UK Trader Scheme you can continue to use the UK Trader Scheme to declare your goods as ‘not at risk’ up until the 30th of September 2023, however, after this date, you must use the UK Internal Market Scheme authorisation as the UK Trader Scheme will be invalid.

Is the UK still part of the internal market?The UK is no longer part of the EU internal market. The UK is a union of 4 nations, the term ‘UK Internal Market’ refers to the set of trading relationships within and across these 4 UK nations (England, Scotland, Wales, and Northern Ireland) rather than trade with the rest of the world.

Are there any other benefits?The Customs Duty Waiver Scheme allows for a waiving of duty on goods brought into Northern Ireland from Great Britain or countries outside the UK and EU. From 1 January 2024, the limit on this will be increasing from the current position which currently is a maximum of €200,000 (~£170,000) over three tax years, to €275,000 (~£235,000) for most businesses.

The Duty Reimbursement scheme is a new scheme introduced from 30 June 2023, to reimburse the payment of EU customs duties paid on goods moved into Northern Ireland that were not sold or used in the EU. The scheme will enable the full repayment of any such duties where the necessary evidence is provided and will be backdated to provide reimbursement for relevant duties from 1 January 2021.

Useful Links: 
https://www.gov.uk/guidance/apply-for-authorisation-for-the-uk-internal-market-scheme-if-you-bring-goods-into-northern-ireland
https://www.icaew.com/insights/tax-news/2023/jun-2023/uk-internal-market-scheme-replaces-uk-trader-scheme-from-september 
https://www.nicustomstradeacademy.co.uk/apply-to-the-uk-internal-market-scheme/

Due to the complex rules, we recommend that traders should seek professional advice. Get in touch with the team at Oldfield via the form or call 02476673160 and we will be happy to advise.

Please note: This article is provided for information only and was correct as at time of writing (07/07/23). Any lists and details provided above are not exhaustive and are not intended to be full and complete guidance.  No action should be taken without consulting detailed legislation or seeking independent professional advice. Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material contained in this article can be accepted.