Brexit and Northern Ireland: business in the dark

The challenge of Brexit for Northern Ireland business is a tale that can be told through pizza.

A year ago, before the UK Government signed the Northern Ireland Protocol as part of the EU-UK Withdrawal Agreement, Angela Keery from Baker Tilly Mooney Moore considered biosecurity issues for a client that operated a food business on the northern side of the Irish border.

“The food/agriculture checks that would have existed without the Northern Ireland Protocol were extremely onerous,” says Ms Keery, who specialises in tax planning for family businesses.

“I had one business that was selling a pizza from one side of the border to the other — only a few miles away.

“They were going to have to get veterinary sign-offs on this pizza, because it had ham, chicken and cheese. They would need several vet sign-offs on one pizza, before it left the premises in the north.

“And then it would have had to go to a Business Inspection Point in the Republic of Ireland, of which there was one, and that’s at Dublin Harbour, so a pizza would have to travel 100 miles to be signed off before being delivered to the retailer.

“Under that system, that business just would not be viable.”

The signing of the Northern Ireland protocol effectively removed this challenge, Ms Keery says.

It allowed Northern Ireland effectively to be treated as part of the EU, when considering the movement of goods to and from Northern Ireland to the Republic of Ireland (and the rest of the EU), as Northern Ireland would have to continue to enforce the EU’s customs rules and follow its rules on product standards.

The decision was hailed by many as a possible or partial solution when signed as part of the Withdrawal Agreement in October, as it recognised the political importance of not reinstating a hard border between north and south.

Instead, a border would effectively exist between Northern Ireland and the rest of the UK, with some checks still required at ports and airports when moving food products and animals from Great Britain to Northern Ireland.

That would see exit declarations and customs declarations required for goods moving between Northern Ireland and Great Britain and vice versa.

EU tariffs would be payable on goods from Great Britain moving into Northern Ireland if they were deemed at risk of moving into the Republic of Ireland, however goods moving from Northern Ireland to Great Britain should be able to be traded under the same rules as currently in place.

Keery says the Northern Ireland Protocol — due to come into effect from January 1 — has made some elements of post-Brexit trade for the Northern Ireland more straightforward.

“Northern Ireland has this unique status,” she says.

“It’s going to be part of the EU customs territory but it is still obviously part of the UK. When we sit in both, it means goods coming into or out of Northern Ireland from the EU will need no declarations, no duties, no safety and security checks, no issues with labelling, no issues with regulation. That will work well.”

But the challenge has come in making the Northern Ireland/Great Britain border operate properly, with the UK Government recently introducing the Internal Market Bill, which has been described as undermining its own Withdrawal Agreement, and potentially breaching international law.

If passed, the Bill would prevent any government from introducing new checks or processes on goods moving from Northern Ireland to Great Britain, removing the need for Exit declarations on goods moving from Northern Ireland to Great Britain.

In other words, goods would pass seamlessly from Northern Ireland to Great Britain, but it is not clear yet whether this refers to Northern Irish Goods, Northern Irish Businesses or any goods moving between Northern Ireland and Great Britain.

The confusion has the potential to undermine the integrity of the UK’s customs territory and potentially opens the door to smuggling, tariff avoidance and organised crime.

“In some ways it’s useful for Northern Ireland businesses, because it’s another piece of paperwork they don’t have to do. But there is the potential for businesses in the EU to route goods through Northern Ireland, and get them into Great Britain without any declarations, without any paperwork and without customs payable.

“There’s a lot of work still to be done in this area.”

Whether the Internal Market Bill passes, the outcome of EU legal action, whether the resulting system would pass the rules of the WTO — these are still all unknowns.

“Before the Northern Ireland Protocol was agreed, all of our planning was completely different. It was focused on how to get goods into the EU and out of the EU.  With the signing of the agreement all those plans became redundant,” Ms Keery says.

“So businesses are now much more resistant to start planning again on a different scenario until they know exactly what it is going to be and how it will work.

“For businesses in Great Britain, there is uncertainty about how they will trade with the EU but they at least know they will have customs declarations and they know they will face paperwork. The only unknown is whether there is going to be a tariff or how much.

“For Northern Ireland, the political stakes are high and this, coupled with enormous uncertainty for businesses, makes planning difficult.”