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EU-UK Brexit infringement procedures 1-month extension

EU extends Brexit infringement deadline to 15 September. EU latest legal action against UK on failure to fully implement Northern Ireland Protocol:

Import One-Stop Shop e-commerce VAT return; customs checks of goods between NI and GB; and excise measures

The European Commission has started four infringement procedures against the UK around the operation of customs, VAT and excise rules under the Northern Ireland Protocol, part of the Brexit Withdrawal Agreement. The UK’s response deadline has now been extended from 15 August to 15 September at the request of the UK given the ongoing Conservative and Prime Minister elections.

The Commission believes that the UK should address these issues for Northern Ireland to continue to benefit from its privileged access to the European Single Market, and is necessary to protect the health, security and safety of EU citizens as well as the integrity of the Single Market.

The EU has partially issued the proceedings in response to the UK’s own threat to overwrite elements of the Protocol in its UK VAT and Northern Ireland Protocol Bill 2022 which is just passed its second reading in the UK House of Commons.

These new procedures come following the issuing of two previous legal actions on the NI Protocol earlier this year.

New: Customs, VAT and excise infringement procedures

The four new infringement procedures are:

  1. UK’s failure to implement the EU Import One-Stop Shop for e-commerce sellers and marketplaces selling goods to consumers not exceeding €150;
  2. Full customs checks and risk controls on goods moving to Northern Ireland from the rest of the UK (Great Britain). The required Northern Ireland customs controls have been delayed by the UK several times, the latest to 2023.
  3. UK failure to transpose EU Excise Framework Directive for excise rules scheduled for 2023
  4. UK lack of transposition of EU rules to enables the application of reduced excise duty rates for small producers of alcohol beverages

If the UK continues to fail to remedy the above issues within two months, the EC may then issued a reasoned opinion on the infringements, and eventual refer the matter to the European Court of Justice.

Latest legal action adds to ongoing SPS and agri-food proceedings from earlier this year

These new procedures add to two existing rounds of infringement proceedings:

  1. June 2022: UK failing to carry out its obligations under the EU’s sanitary and phytosanitary (SPS) rules. In particular, the UK is not carrying out the necessary controls, and is failing to ensure adequate staffing and infrastructure at Border Control Posts in Northern Ireland. The UK’s Protocol Bill has also has the effect of disapplying EU law. Secondly, failing to provide the EU with certain trade statistics data in respect of Northern Ireland, as required under the Protocol.
  2. March 2022: UK failing to properly implement the certification requirements for the movement of agri-food. This infringement proceedings has since been escalated with a Reasoned Opinion in June 2022. If no action is taken by the UK, the next step is a referral to the ECJ.

Dual customs and VAT status for NI goods

Following the end of the Brexit transition period on 31 December 2020, NI has taken up a dual position in the EU Customs Union, Single Market and VAT regime as well as in the UK’s equivalents for goods only. However, the reality is that NI is in the EU sphere, and clashes are appearing where goods cross into GB. The rules of engagement for this were contained within the Northern Ireland Protocol, which accompanied the January 2020 Withdrawal Agreement which, in turn, sealed the UK-EU exit terms.

The aim was to avoid the needs for border controls between NI and the island of Ireland (IE) instead, moving any checks onto the goods moving between GB and NI with an eventual EU destination to the GB/NI border.. So, while the term ‘border in the Irish Sea’ has become popular, it is actually a border at the NI ports.

In addition to avoiding the need for an IE-NI border, the NI Protocol enabled the UK to diverge from the EU regulatory regime. This is something which had not been envisaged in the 2019 Theresa May ‘backstop’ proposal whereby the UK would remain in the Customs Union for a period.

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