My noble Friend the Minister of State (Lord Agnew of Oulton) has today made the following written ministerial statement.
Under the Northern Ireland protocol (“the protocol”), EU VAT rules in respect of goods will continue to apply in Northern Ireland. However, Northern Ireland is, and will remain, part of the UK’s VAT system.
As set out in the 10 December 2020 Command Paper [CP 346] , the Government are aware of concerns regarding the use of the second-hand margin scheme in Northern Ireland, with respect to motor vehicles sourced in Great Britain. The Government understand the impact this may have on Northern Ireland traders and consumers, and are therefore exploring options to minimise this.
As an interim measure, the Government will be issuing guidance to traders on how they can continue to apply the margin scheme in relation to motor vehicles sold since the end of the transition period.
Following initial engagement this week, the Government will also seek to agree a long-term derogation with the European Commission from EU VAT rules to allow the margin scheme in Northern Ireland to apply in respect of motor vehicles sourced in Great Britain.
In line with this approach, the Government will bring forward legislation at the earliest opportunity on the use of the margin scheme in Northern Ireland with respect to motor vehicles sourced in Great Britain. Consistent with the Government’s intentions to apply for a derogation, this legislation will be retrospective and apply from 11pm on 31 December 2020.