In February, HMRC published details of the Windsor Framework. The Framework aims to address issues with the application of the Northern Ireland Protocol, including trade friction.
From a tax perspective, the Windsor Framework could have important ramifications for VAT, customs and excise.
The Framework provides for increased flexibility over VAT rates in Northern Ireland. In particular, the zero-rate would be permitted for goods supplied and installed in immovable property located in Northern Ireland.
This flexibility appears to pave the way for alignment of the rules on energy-saving materials between Great Britain and Northern Ireland (there is currently divergence).
Limits on the number of reduced and zero rates in Northern Ireland would also be removed.
Northern Ireland would be exempted from changes to the small business VAT regime across the EU that are due to come into force in 2025 and which could result in a requirement to lower the VAT registration threshold in Northern Ireland.
Open Consultation – Call for Evidence: VAT Energy Saving Materials Relief
HMRC has published full details of its ‘Call for Evidence: VAT Energy Saving Materials Relief – Improving Energy Efficiency and Reducing Carbon Emissions’.
The Call for Evidence intends to build on changes introduced in spring 2022, providing VAT incentives to improve the energy efficiency of homes over a five year period.
The intention is to introduce two further areas of reform; the inclusion of additional technologies, and installations of energy saving materials in buildings intended solely for a relevant charitable purpose.
Simplified VAT Guidance from HMRC for Overseas Sellers
HM Revenue and Customs (HMRC) has published simplified VAT guidance for overseas sellers, with a new translation aimed at Chinese retailers that sell goods online into the United Kingdom.
The guidance, Selling goods using an online marketplace or direct to customers in the UK has been translated into simplified Mandarin to support sellers exporting goods from China to comply with UK import and VAT regulations.
In 2022, the UK imported £83.3 billion in goods and services from China and Hong Kong. Online shopping accounted for 26.5% of all UK retail sales in 2022, with a substantial number of goods being bought from international sellers via online marketplaces.
HMRC is encouraging UK agents and shipping companies to share the simplified guidance with their customers.