Overview

The Taxation (Post-transition Period) Bill aims to clarify and regulate taxation related to goods moving into, out of, and within Northern Ireland after the Brexit transition period. It addresses customs duties, VAT, excise duties, and the recovery of unlawful state aid, all within the context of the Northern Ireland Protocol.

Description

The bill makes several key provisions:

• Northern Ireland Protocol Provisions: New customs duties are imposed on goods moving between Great Britain and Northern Ireland, depending on their origin and risk of onward movement to the EU. The Treasury is given broad powers to make regulations determining the specifics of these duties, including reliefs and enforcement mechanisms. VAT and excise duty implications for goods moving between Great Britain and Northern Ireland are also addressed, aiming for alignment with EU legislation where appropriate.
• Value Added Tax (VAT): The bill amends the Value Added Tax Act 1994 to address VAT on goods acquired in Northern Ireland from member states, introducing a new "NI acquisition VAT." It also covers VAT implications for online sales by overseas businesses and low-value importations, introducing rules for deemed supplies via online marketplaces and reverse charges for certain goods.
• Excise Duty: Excise duties are clarified for goods moved to Northern Ireland from Great Britain, specifying which goods are subject to these duties and under what circumstances.
• Controlled Foreign Companies (CFCs): The bill addresses the recovery of unlawful state aid related to CFCs, ensuring compliance with a specific EU Commission decision (EU) 2019/1352.
• Insurance Premium Tax (IPT): Minor amendments are made to clarify the liability of the insured in specific cases.
• Aviation Gasoline: The rate of fuel duty on aviation gasoline is increased.

Government Spending

The bill is expected to impact UK government spending through changes to customs duties, VAT, and excise duty revenues. Precise figures are not provided in the Bill text, but changes to revenue collection mechanisms and new duties are likely to significantly affect government income. The increase in fuel duty on aviation gasoline will contribute a small additional revenue stream. The recovery of unlawful state aid will impact government spending by increasing revenue.

Groups Affected

• Businesses: Businesses involved in cross-border trade between Great Britain and Northern Ireland will be significantly impacted by new customs duties and VAT regulations. Online marketplaces and businesses selling goods online will face new obligations. Businesses who benefited from unlawful state aid will be affected by the recovery of unlawful state aid.
• Consumers: Consumers in Northern Ireland may see price changes on goods due to new duties and taxes.
• Government agencies: HMRC will be responsible for administering and enforcing the new tax provisions.
• Aviation industry: The increase in aviation gasoline fuel duty will impact the costs for airlines.

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