The UK Government has asserted that its new Windsor Framework to refine post-Brexit arrangements for Northern Ireland will “protect” the country’s second-hand car market.
Back in January 2021 it reinstated the VAT margin scheme for cars imported and resold by car retailers in Northern Ireland after lobbying from retailers including Lookers, TrustFord and Sytner about a post-Brexit tax oversight which resulted in a 20% price hike on stock sourced from the UK mainland.
But Prime Minister Rishi Sunak has suggested that changes to VAT arrangements on vehicles heading across the Irish Sea to Northern Ireland under the new Winsor Framework deal could remedy the issue for good.
“It protects Northern Ireland’s second-hand car market into the future with a new scheme to take effect from 1 May 2023, ending two years of uncertainty for traders and consumers,” Sunak stated in a speech delivered in Parliament.
Sunak and European Commission President Ursula von der Leyen announced that a new deal has be struck between the UK and the EU over the post-Brexit Northern Ireland Trade Deal yesterday.
The Framework creates a new “green lane” for imports from the UK into Northern Ireland that are not destined for the EU Common Market, dramatically reducing the volume of checks required.
The UK Government claims that the new deal will reduce the volume of EU laws applicable in NI by around 1,700 pages.
In a speech delivered in the Houses of Parliament, the Prime Minister said that EU VAT and excise rules will also be removed under the deal, ensuring that NI applies the same VAT and alcohol taxes as those that apply in the rest of the UK as part of a move that would “restore the integrity of the UK internal market and UK VAT and excise area”.
As part of this Government can bring forward legislation to ensure that NI will be able to apply zero rates of VAT to the installation of energy-saving materials such as heat pumps and solar panels.
It also exempts NI businesses from a range of “bureaucratic EU rules”, Sunak said, saving 2,000 businesses from needing to register for VAT under a 2025 EU Directive, avoiding a range of other new burdens on SMEs and divergence with Great Britain.
The National Franchised Dealers Association (NFDA) has said it will be scrutinising the deal in detail to ascertain the full repercussions of the deal on the car retail sector.
Chief executive Sue Robinson said: “We are encouraged to see that the government of the United Kingdom and the European Union have made a breakthrough regarding the Brexit impasse in Northern Ireland.
“This is obviously particularly important for NFDA NI members and in the coming weeks we will be looking into the details of the Windsor Framework to understand the full implications.
“NFDA NI will continue to support franchised dealers in Northern Ireland, liaising with the UK government and the Northern Ireland Assembly to ensure that our members are able to conduct trade effectively between the Northern Ireland, Great Britain and the European Union.”