Page 87 - Linkline Yearbook 2018

The availability of these reliefs should, to some extent, soften the impact of Brexit for some Irish businesses, but their application is limited.
The UK government’s stated position to date is that the UK will leave the Customs Union so it is able to negotiate free trade agreements with other countries, but it would like to negotiate a free trade agreement with the EU.
The best outcome for Ireland would be the retention of the UK in the Customs Union with next best being a comprehensive negotiated free trade agreement which maintains the key features of the current trading regime and avoids the introduction of tariffs on trade with the UK.
A transition period based on a time limited Customs Union framework has recently been suggested by the UK. If a transition period is not agreed around customs, excise and VAT, there will be a significant amount of work required in a short and possibly unrealistic timeframe.
The clock is ticking to reach agreement before March 2019 and the lurking shadow of a cliff-edge Brexit remains, if a negotiated settlement is not reached.
‘Frictionless trade’ - fact or fiction?
The UK government has proposed the idea that there could be a ‘frictionless border’ between Ireland and the UK post- Brexit, with technology being extensively used to manage frontier issues including customs.
The absence of detail has left many sceptical on the form this may take and the practicalities of monitoring the movement of goods within the confines of EU customs, excise and VAT rules. Even if the UK were to remain in the Customs Union, the challenges associated with the UK leaving the EU should not be underestimated.
For example, depending on the form of free trade agreement or Customs Union agreed, customs declarations of some form may be required in respect of trade between Ireland and the UK.
An additional and less discussed feature is that even if the UK remains in the Customs Union, it would not remain as part of the EU VAT area. This would mean that, as things currently stand and unless changes are made, VAT would be payable on goods moving to Ireland from the UK at the point of
importation (and vice versa) which could represent a significant VAT cash flow cost for businesses. Some form of checking the movement of goods traded between the two will be required from a VAT perspective also.
Current EU rules facilitate cross-border shopping between Ireland and the UK. Brexit will have an impact imposing allowances on shopping cross-border. How these rules will be enforced will require careful consideration, especially in the context of cross-border shopping in Northern Ireland.
It is safe to assume Brexit, in whatever form, will result in significant administrative burdens and challenges for Irish businesses and will necessitate a substantial investment in infrastructure by businesses and Revenue Commissioners alike.
Planning is essential to prepare for the impact of Brexit and businesses are advised to take steps now to prepare rather than delay. Businesses that have a good understanding of their supply chains and have quantified their Brexit exposures in detail at a product, customer or supply chain level will be best placed to create the most competitive solution which is fit for a post-Brexit world – whatever that brings.
It is safe to assume Brexit,
in whatever form, will result
in significant administrative burdens and challenges for Irish businesses and will necessitate a substantial investment in infrastructure by businesses and Revenue Commissioners alike.
Fionn Uibh Eachach Director, VAT, KPMG Ireland
The CharTered InsTITuTe of LogIsTICs & TransporT 87
KPMG