There has been tremendous change in the customs and trade landscape in Northern Ireland (NI) since the UK’s withdrawal from the EU single market in 2020 and the implementation of the NI Protocol/ Windsor Framework.
NI importers/exporters have had to contend with a new customs and trade framework, changed documentation and new reporting requirements. Things have moved fast, and it has been a challenge for many companies to keep on top of tax compliance, supply chain efficiency and costs.
As 2025 begins, we identify some of the key areas your business should focus on and seek support with. At BDO we can help your company to comprehend and navigate the complexities in UK internal trade (GB – NI) and broader international trade.
For bespoke support or further details on any of the below areas, please do not hesitate to contact us.
BDO can provide you with a customs and trade health check to give you confidence that you are making accurate and timely declarations to HMRC, availing of all the facilities available to you and managing customs duties and taxes efficiently.
1) What is the green and red lane system for goods moving GB to NI?
The Windsor Framework aims to ease the trade rules originally agreed under the NI Protocol and to relax a range of post-Brexit restrictions on the movement of goods from GB to NI. Fundamental to the Windsor Framework is the introduction of a two-lane system for goods, with NI traders able to benefit from a ‘green lane’ requiring reduced customs data requirements and interventions from HMRC based on achieving a trusted trader status (UK Internal Market Scheme – UKIMS).
The two-lane system will operate as follows:
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Firstly a ‘green lane’ for goods moving from GB to NI where the goods will remain in NI, deemed “Not at risk” of entering the EU. ‘Not at risk goods’ will not be charged duty if entering from GB. Pre-registration as a trusted trader under the United Kingdom Internal Market Scheme (UKIMS) is required to operate in the green lane. Business will be able to upload commercial data to a traders goods profile to reduce the administrative burden each time goods are imported into NI. Where business to business movements take place using the simplified process for internal market movements (SPIMM), a simplified dataset can be used with no need for a supplementary declaration.
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Secondly a red lane for goods deemed “at risk” of entering the EU. Goods which are considered at risk of moving into the EU single market (e.g. Ireland) must move through a red lane, where full checks and controls are applied.
It should be noted that from the 31st of March 2025, B2B movement of parcels between NI and GB will move in line with the same processes that are currently in place for freight.
The two-lane system may require some business change to take full benefit of the UK internal market scheme. It will be critical to understand if your goods are ‘at risk’ and to be able to obtain the required data and documentation to support this determination and to fulfil the trusted trader status.
2) Deciding whether your goods are ‘At risk’ or ‘Not at risk’ when imported to Northern Ireland
In order to declare goods as “Not at Risk”, you must be approved as a United Kingdom Internal Market Scheme (UKIMS) authorised trader. Your business must be established in the UK, and meet compliance, records, systems, controls and evidence requirements.
When you declare your goods as “Not at risk’ goods this means that;
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No EU duty if entering NI from free circulation in GB
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UK duty if entering NI from outside EU and UK
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UK duty if entering NI from GB where goods not in free circulation in GB
Very limited processing is facilitated under UKIMS, this is subject to an annual turnover restriction less than 2 million in most recent final year or meet one of the sectoral exemption requirements.
Goods which are imported ‘At risk’ will be charged EU duty rates.
Whether you import your goods as “at risk” or “not at risk” there remains significant administration and record keeping requirements.
When declaring goods as “not at risk” importers must keep supporting evidence for each consignment you move into NI and this evidence will need to be accessible to HMRC for 5 years. Both “At risk” and “Not at Risk” movements necessitate the completion of customs import declarations.
3) Not availing of duty remission/duty waiver/ duty reimbursement facilitations
NI traders should strategically consider the mechanisms to remove any EU customs duties that attach to ‘at risk’ goods.
There are a number of facilitations available to traders to manage and remove potential customs duties such as:
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Customs Duty Waiver Scheme (CDWS) – this scheme requires pre authorisation from HMRC and allows you to offset any duties incurred on ‘at risk’ tariffs from your de minimis state aid allowance up to a limit of €300k over a 3-year period.
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NI Duty Re-imbursement Scheme – This scheme allows traders to reclaim EU duties paid on goods that have moved into Northern Ireland (NI) and been declared ‘at risk’, providing traders can supply evidence to show the goods did not enter the EU.
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Other customs procedures e.g Inward Processing Relief (IPR) – various customs procedures exist to manage customs tariffs particularly in situations such as temporary importation, processing and storage.
Application, record keeping and reporting may attach to these facilitations so it's important to seek expert support to set up and manage them.
4) EU – UK Trade and Co-Operation Agreement (EU - UK TCA)
To avail of free trade agreement rates of customs duty under the EU - UK TCA, the goods must satisfy the rules of origin set out in the agreement. Preference can be claimed on import into NI if the correct proof of origin is available, through either a statement of origin or using importers knowledge.
Goods will often be required to have been produced or manufactured in GB to be considered originating under the terms of the EU – UK TCA.
Goods will not qualify as originating simply because they were transported or distributed from GB. In 2024 we have seen an increase in verification requests made by HMRC to confirm goods claiming preference satisfy the rules of origin set out in the EU - UK TCA. If the goods do not satisfy the rules or origin or satisfactory evidence is not available, the NI importer may be liable for the import duties payable and may be subject to penalties so it’s important to ensure any claims made or that will be made in future are robust.
5) Sector Specific Challenges – Food and Agricultural products
If you are importing food and agri products into Northern Ireland, in addition to customs requirements you also need to comply with SPS entry requirements. Failure to adhere with SPS entry requirements can result in product rejection on entering NI. Where importing food for final consumption in Northern Ireland and if you wish to avail of simplified SPS entry requirements you must be a member of the Northern Ireland Retail Movement Scheme (NIRMS).
6) New NI/UK labelling rules
From 1 January 2025, all authorised medicines released for the NI market will be on a UK-wide or NI-only basis and authorised only by the MHRA. All medicines intended for the UK or NI market must bear ‘UK only’ on the packaging when released to the market from 1 January 2025.
From 1 July 2025 all remaining labelling requirements on goods imported into Northern Ireland through the ‘retail movement scheme’ will apply (Phase 3 requirements). This scheme applies to businesses in Northern Ireland who are involved in selling or facilitating the selling of food for final consumption in Northern Ireland. From 1 July 2025 composite products, fruit, vegetables, and fish will require individual labelling.
7) Submitting Declarations in NI
It's important to consider the means of submitting customs declarations. This is particularly important where traders will make decisions as to the tax liability of GB – NI goods movements via supplementary declarations directly via TSS.
If you import your goods from GB to NI using the TSS Simplified Declaration process, this necessitates the submission of a simplified frontier declaration and post consignment movement the completion of a Supplementary declaration and the payment of any customs duties to complete the customs entry. Several traders have not submitted the Supplementary declarations and are now in a backlog scenario. This is an area of focus for HMRC at audit.
8) Inaccurate Tariff Classification
NI importers are not legally able to rely on the tariff classification supplied from suppliers or on commodity codes derived from Intrastat. The tariff classification of imported products will determine whether customs duties apply and what duty relief mechanisms are available.
If your goods are declared under the wrong customs tariff classification, then it is possible that the customs duty rate applied to your goods will be inaccurate. This could lead to goods being declared ‘not at risk’ when they are ‘at risk’ and vice versa.
This can also lead to large overpayments or even underpayments which can lead to problems at audit. Tariff classification can be difficult to execute for business but its critical to develop a database of tariff codes for the products you import from Great Britain and the Rest of the World (ROW). This information is required to 6-digit level for UKIMS in most cases which is significantly reduced from the normal requirement for 10-digit codes.
9) INCOTERMS
INCOTERMS, short for "International Commercial Terms" are standard trade definitions devised and
published by the International Chamber of Commerce (ICC). These terms are used in international sales contracts to clearly establish the basis on which the seller will invoice the buyer.
The terms define the risks and responsibilities taken on by the buyer and seller. In Northern Ireland this is important because INCOTERMS with GB suppliers will define who must deal with declarations into Northern Ireland and any corresponding customs duty liability. For instance, agreeing DDP INCOTERMS with a GB supplier can mean that NI business is not responsible for the customs formalities at entry into NI.
10) HMRC Audits and Post Audit Reviews
HMRC has increased customs audit activity over the last number of years so it's essential to take a proactive approach to managing your customs declarations. Customs and TSS will support importers but ultimately the burden of responsibility rests with the importer.
NI Importing business should consider conducting reviews of declarations submitted to customs via the Trader Support Service (TSS) or by customs clearance agents. This is important to ensure accuracy of declarations made, identify opportunities to remove customs duties and to generally ensure compliance with NI specific trade rules.
11) Insufficient Paperwork
The need for declarations at import from GB to NI has meant that information and documentation gaps can have a detrimental impact on your TSS supplementary declaration completion. To create the supplementary declaration, you will require sufficient paperwork to fulfil the data points (e.g. you will need tariff information, country of origin information, value information etc.).
It can be a challenge to obtain International Trade standard documentation from GB suppliers who are used to supplying locally within the UK but this is required to complete the declarations as a starting point, but potentially also to evidence why customs duty is not being paid (use of the EU – UK TCA).