Exiting the European Union (Value Added Tax) — House of Commons, 2021-02-03
Topic: Foreign Trade
Samuel Wilson (Democratic Unionist Party, Right): May I first echo the point made by the right hon. Member for Wokingham (John Redwood) that, as the implications of the protocol become ever more apparent, it becomes ever clearer that the promises made to the people in Northern Ireland that they can trade as freely with GB as they did before 1 January and that they will be regarded as fully part of the UK internal market, are not true? There is a border on the Irish sea. There is disruption of trade between Northern Ireland and GB, and vice versa. While the Prime Minister and the Government will maintain that the Union between Northern Ireland and the rest of the United Kingdom has not been affected, the truth of the matter is that the people of Northern Ireland are not experiencing the full benefits of being United Kingdom citizens that they had before 31 January Indeed, the regulations illustrate some of the issues that are still going to be faced by people and businesses in Northern Ireland. I welcome the fact that the Government have tried, at least, to overcome some of the implications of the protocol, but I say to the Minister that this kind of tinkering through VAT regulations will not answer the issues that people in Northern Ireland face Let me go through some of the issues that the regulations deal with. First, if DIY builders bring in materials—probably most commonly, in Northern Ireland, from the Irish Republic—that are subject to VAT, they will be able to claim back that VAT. What assessment has been made of the additional work that anyone will have to undertake in order to show the VAT that was payable in the Irish Republic or, indeed, in some other EU member state so that it can be claimed back under these regulations Do not forget that we are talking about DIY builders. I think of a constituent who came to me just this week because of a delay in the payment of the VAT refund that he was owed on a house that he had built over a period of years. As money became available to him, he built more and more of the house, and the VAT was outstanding. Even with the current regime, the paperwork involved was quite substantial, but he was doing it by himself; he was not a professional. Now we have this added complication. Other Members have talked about the need for clarification. What clarification will there be for people in such situations about what information they need to gather and the way in which it should be gathered The second issue is the supply of goods into Northern Ireland—the VAT that is required to be paid on them if they are moving on into the EU, and the fact that VAT can be refunded where the goods are staying in Northern Ireland although they might have been VAT-able I think of another example that was brought to me this week, by people involved in the aerospace industry in Northern Ireland. When they bring in aluminium from GB, they have to pay the VAT on it because, under the protocol, it is now coming into a part of the United Kingdom that is deemed to be subject to the EU VAT regime. When that aluminium goes into aircraft parts, the parts do not have any VAT on them, but until it goes into the parts and the parts are sold, those people are obliged to pay out the VAT on it That, of course, can be quite a substantial amount of money. It causes cash flow problems and leads to additional administration. I am not so sure that what is provided for in this legislation deals with that problem, because until those people can show either that the aluminium has been incorporated into the parts or that those parts are not going somewhere where they are eligible for European taxes, they have to make the payments The Minister is right that we have to close the loophole between Northern Ireland and GB for those who would seek to use Northern Ireland as a back door to escape paying VAT on goods that may be zero-rated in the United Kingdom. Again, what will that mean in terms of checks on goods coming through Northern Ireland ports to GB? How will it be determined that those goods have not originated in the Republic, as opposed to Northern Ireland? Will all Northern Ireland suppliers of goods into GB have to go through a process to show that the goods were made in Northern Ireland and are therefore exempt from VAT, or had had UK VAT rates applied to them? What additional checks and administrative burdens will that cause for businesses In relation to how HMRC has handled this issue, all the information I have from the Department for the Economy in Northern Ireland is that businesses are still confused. They do not know what is required of them. They do not know what paperwork will be required, how they claim exemptions and so on. There is a huge piece of work to be done. I come to the point that, despite what the Scottish National party spokesperson has said, we cannot hang on to this protocol. It is damaging relations within Northern Ireland, damaging the Northern Ireland economy and adding substantially to the requirements for businesses. This legislation shows that there will be additional requirements on businesses in Northern Ireland, which make trading more expensive The protocol is not some advantage or gift, as the Scottish National party would seek to try to present it to the people of Northern Ireland; it is poison to the people of Northern Ireland. It has poisoned relationships. In my constituency, we are finding that workers are under threat at the ports, such is the frustration and anger. That was never taken into consideration when the Unionist population of Northern Ireland was cynically set aside to get a quick deal with the EU on the basis that the important border was the border between Northern Ireland and the Republic, rather than the relationship that Northern Ireland has with its own country What are the implications for people who build their own houses in claiming VAT? They are bringing supplies in from, presumably, mostly the Irish Republic. What are the administrative implications for them? What are the implications for those businesses bringing in supplies from GB, for which VAT will have to be paid and then reclaimed at some later date? What exemptions can be made where it is quite clear that the goods are not going into the EU or that the materials are going into something that will never be VAT-able anyhow? How can we overcome that issue? If the Government are going to close Northern Ireland as a back door into GB for those products from the European Union that are being routed through Northern Ireland to avoid UK taxes, what implications, if any, does that have for suppliers in Northern Ireland? If it has no implications, how do the Government intend to differentiate goods that are coming through the Republic into Northern Ireland from goods that are going purely from Northern Ireland to GB I implore the Minister to take this message back: as far as the protocol is concerned, we can have this continual tinkering, but it will not deal with its underlying, systemic and fundamental problems—that Northern Ireland is still subject to a large amount of law that originates outside its own country, which eats into the very heart of economic activity and undermines its constitutional position within the United Kingdom.