We welcome the announcement on Monday 27 February 2023, that following intensive negotiations over recent weeks between the UK and EU, a revised Ireland/Northern Ireland Protocol deal, (now referred to as the Windsor Framework) has been agreed in principle.

In our view this Framework (and the key measures and improvements described further below) should significantly reduce the burden of moving goods into Northern Ireland from the rest of the UK whilst retaining all of the benefits under the original Protocol of frictionless trade with the EU single market.

We are hopeful that this agreement in principle when passed into law by both sides will provide the required certainty and stability that businesses in Northern Ireland require to make investment decisions while also providing a significant platform to attract new overseas investment into Northern Ireland, due to our unique dual market access into both the UK and EU markets.

In this update, Johnny Hanna and Frankie Devlin recap briefly on the deadlock since the Protocol was first introduced in 2021, and provide an outline of the key business measures in the Windsor Framework and what it means.


While the Ireland/Northern Ireland Protocol (“the Protocol”) came into operation in January 2021, during the following period of just over two years, there have been consistent differences between the parties as to how the Protocol rules should be implemented particularly in relation to trade between GB and Northern Ireland.

This led the UK to unilaterally introduce grace periods in certain areas and the EU countering this with legal infraction proceedings at various stages. During this stalemate period businesses in Northern Ireland have been getting on with running their businesses and complying as best they can with the new set of trading rules relating to customs, VAT, sanitary and phytosanitary (SPS) requirements, as well as regulatory and governance issues. 

The EU and UK did make some efforts to break the deadlock with their respective proposals set out in the UK Command Paper (PDF, 244KB) of 21 July 2021 and the four EU non-papers (PDF, 1.4MB) on 13 October 2021. However, significant differences remained between the UK and EU on how aspects of the Protocol rules should be implemented.

The EU did indicate at various stages that it was prepared to be more flexible and the EU non-papers gave some insights on what might be possible but without giving much detail away. The lack of movement was at least partly due to a lack of trust between the parties which did not help to move the dial on many of the difficult issues and we entered a period of deadlock with negotiations effectively stalled.

The next significant event was on 13 June 2022, when the UK Government published the Northern Ireland Protocol Bill (The Protocol Bill). This was its response to what they said were problems arising from the Protocol relating to trade disruption and diversion, costs and bureaucracy for businesses and households in Northern Ireland. The Protocol Bill would have given ministers powers to disapply parts of the Protocol and relevant parts of the Withdrawal Agreement (WA) in UK law.

The key proposals included in this Protocol Bill related to a green lane and a red lane model for customs and the movement of goods from GB to NI, as well as a dual-regulatory regime to deal with regulatory divergence and SPS (sanitary and phytosanitary) issues on these movements.

Like many other businesses our message to the UK Government was clear, that passing the Protocol Bill into law was not the way to deal with outstanding problems and that a negotiated agreement between the UK and the EU was the only way of reaching a long-term stable deal that works for all parties, including local businesses and households. 

After a prolonged period of deadlock, relationships between the UK and EU have significantly improved since Rishi Sunak became Prime Minister in October 2022. This allowed the sides to get back into intensive negotiations to deal with outstanding problems. Importantly, the EU position has moved on some previous red lines and they have clearly taken a more flexible approach and have taken on board many of the requests that the Northern Ireland Business Brexit Working Group (of which KPMG has been a member throughout) put forward in written submissions. As part of the Windsor Framework, the UK Government have agreed not to proceed with their Protocol Bill and in turn the EU will drop their various infraction proceedings against the UK.

With compromise on both sides, this announcement of a new deal is to be warmly welcomed. Businesses will need time to study the detail and consider how it impacts their specific business sectors and supply chains.

Key features of the Windsor Framework

The Windsor Framework sets out the agreed changes to be made to the Protocol relating to customs, VAT, regulation in goods, state aid regime, as well as addressing the democratic deficit. All related documents can be viewed here as well as a useful Q&A Guide from the European Commission

In his opening statement earlier this week, the UK Prime Minister made clear that his main objectives were threefold:

  1. to restore the smooth flow of trade within the UK internal market,
  2. safeguard Northern Ireland’s place in the UK and
  3. address the democratic deficit.

The Windsor Framework would fundamentally amend the text and provisions of certain key areas of the Protocol, but it should be noted that the changes will be carried out within the framework of the Withdrawal Agreement which provides that the Joint Committee can adopt decisions to correct errors and address unforeseen problems when the Withdrawal Agreement was signed. The relevant legal texts from the UK government are included here.

This sets out the various amendments to the Withdrawal Agreement and also to the Decision Paper No 4/2020 dealing with the “at risk” test.

It should be noted that the practical implications and changes agreed are significant compared to how the original Protocol would have applied if implemented in full.

Under the Windsor Framework the EU have to a large extent accepted the green and red lane model at ports as proposed by the UK Government in its Protocol Bill. This means the EU now agree that goods moving from GB to Northern Ireland which are destined for final consumption or final use in Northern Ireland should be treated differently to goods moving on to the EU single market. This is welcome and should remove the need for full customs supplementary declarations and other checks and controls for businesses that can move goods through the green lane. 

Northern Ireland Protocol


Green lane

Goods 'not at risk' of moving into EU

The movement of goods into NI from countries outside the EU is covered under Article 5 and Annex 2 of the original Protocol. The Windsor Framework does not amend these, however, it does amend and improve on the tests set out in Article 5(2) for goods that are not “at risk” of moving into the EU, on which there are further comments in the sections below.

The Windsor Framework also significantly sets out a new arrangement for a UK internal market scheme, or green lane for goods staying in the UK and not at risk of moving to the EU. The EU have agreed to amend their EU customs code to accommodate this.

The green lane would be available to businesses eligible to operate under the trusted trader scheme. Under this scheme detailed information would be provided on their operations and supply chains to support robust audit and compliance in order to validate that the end consumption of goods will be in the UK and not the EU.

Businesses that are already registered under the existing UK Trader Scheme operated under the Protocol should be able to automatically roll over their registration into the new scheme which is due to be up and running by 30 September 2023. Importantly, the Windsor Framework will enable operators in the rest of the UK to join the trusted trader scheme where they meet the relevant criteria. This means that they will not have to be established in NI, as long as they have a customs indirect representative in NI and this can be fulfilled where they use the trader support service (TSS) to move goods into NI.

For businesses eligible to move goods under the green lane arrangement, full EU customs code (Union Customs Code, UCC) rules will not apply and instead a simplified set of commercial information, consisting of a maximum of 21 data sets can be used to move goods. Whilst this is not a complete removal of paperwork or oversight for the EU, it would remove the need for full supplementary customs declarations, checks and controls. The need to provide customs commodity codes can also be removed where a business provides details of the types of goods it is normally moving in its application for the trusted trader scheme. Alternatively, commodity codes can be provided by businesses but this can be at the reduced 6 digit level. The TSS will be retained to hold the relevant data which the EU will be able to access and to continue to support businesses. 

This proposed green lane simplification has been reached following the recent data sharing agreement whereby the UK will provide the EU with real time data, through access to its IT system. This critically allows the EU to monitor goods moving into NI and to flag any suspicious movements that then can be checked by UK HMRC and Border Force where necessary.

The use of a green lane is a significant concession by the EU from what would otherwise apply under the Protocol if implemented in full. It does not completely remove the need to provide data nor does it completely remove all EU customs rules, however it should achieve a much lighter touch outcome. This will rely mainly on EU access to data, a more robust trusted trader scheme and improved market surveillance and a legal agreement on exchange of information on the application of Articles 5(1) and 5(2) of the Protocol. As noted above, the EU have agreed to amend certain EU customs regulations to enable this change to happen.


Under the Windsor Framework it has been agreed that certain categories of parcel movements will automatically not be considered at risk of moving into the EU and therefore can use the green lane. This is a significant improvement on the original Protocol as this would but for the grace periods currently being relied upon, have required full customs declarations not only for business parcel movements but also every consumer parcel movement.

The automatic green lane categories for parcels will relate to a) non-commercial consumer to consumer (C2C) parcel movements (i.e., private individuals), where the parcel is being sent to an individual residing in NI, and; b) business to consumer (B2C) parcel movements where the parcel is sent to a private individual residing in NI and is exclusively for personal use. These two categories have been added to the updated Joint Committee Decision (i.e., the legal text) for goods that will not be considered to be at risk of moving into the EU. Neither the C2C or B2C parcel movements will require customs declarations, however, the B2C movements will be underpinned by an authorised carrier regime as well as the UK sharing data with the EU in order to monitor and manage any risks of smuggling into the EU.

For business to business (B2B) movements of parcels the intention is that customs tariff and rules of origin requirements will be avoided under a new regime to be brought in by October 2024.

Red lane

Goods 'at risk' of moving into the EU

For goods that move from GB into NI for onward movement to the EU, normal EU customs rules will apply, with the requirement for supplementary declarations, as has been the case since the Protocol became operational in January 2021. These movements will also potentially be subject to EU tariffs where the goods are destined for the EU.

As was the case under the Protocol, similar rules and consequences will apply under the Windsor Framework for goods that move into NI from outside the EU that are “at risk” of moving into the EU. For goods that are at risk, they will be subject to red lane treatment and potentially EU tariffs. The factors that will determine whether goods fall into the ‘at risk’ category under the Windsor Framework will remain as they were under the Protocol, namely, a) goods brought into Northern Ireland from outside the EU that are subject to commercial processing, and b) goods brought into Northern Ireland from outside the EU that will or are likely to subsequently be moved into the EU. If either of these apply, the goods will be considered to be ‘at risk’. 

The Windsor Framework will replace the previous legal text of Joint Committee Decision No 4/2020 that applied under the Protocol with a new Joint Committee Decision.

Many of the same complexities and challenges of the ‘at risk’ rules will remain as was the case under the Protocol, though this determination has some key differences depending on whether the goods come from GB into NI, or move into NI from the Rest of the World (i.e. outside of either the UK or EU). The nature of the product, country of origin and commodity codes will continue to be key factors. We have not gone into the detail of the rules here which can be found at the link above, however, the specific rules will need to be studied carefully to determine if the ‘at risk’ test applies and whether an EU tariff arises.

It should also be noted that there are a number of changes to the above mentioned new Joint Committee Decision which should widen the scope in certain sectors for goods to remain as ‘not at risk’ and therefore potentially not having to use the red lane with resulting EU tariff implications. These are as follows:

  • An increase in the turnover threshold from £500k to £2million for those businesses carrying out processing activities that can be considered not to be undertaking commercial processing for the purposes of the first element of the ‘at risk’ test. This should bring more businesses into scope to move goods into NI as ‘not at risk’. It is really important to note that these businesses will still need to be eligible for the trusted trader scheme i.e. they must confirm through an application process (if not already enrolled in the current scheme), with on-going monitoring, that the goods are not moving to the EU.
  • A helpful and potentially significant change has been added to extend the definition of non-commercial processing for specific sectors who exceed the £2mill threshold (animal feed, healthcare, construction, not-for-profit sectors are included). Although these sectors were included under the previous rules where these sectors brought product to NI for final use, it required the importer to also be the final user of the goods. The new rule now means that an intermediary who is importing the goods but is not the final user, could fall into the definition. This should expand the scope for ‘not at risk’ green lane movements for the animal feed sector.
  • A change has been added to include automatically as ‘not at risk’ a number of categories of parcel movements, namely between consumer to consumer and between business to consumer (we have provided more detail on this in the green lane section above).
  • Operators in the rest of the UK will be allowed to join the trusted trader scheme which will expand and underpin the ability to move goods from GB to NI as ‘not at risk’, again on the basis that the goods will not move to the EU.

Clearly some businesses may be able to use the green lane for some movements of goods but they will have to use the red lane for other movements of goods.

There will be some businesses, as is currently the case, that do not know at the time of moving the goods from GB into NI whether they will subsequently remain in NI/UK, or move some or all of the goods to the EU. These may all have to be moved through the red lane in the first instance and be declared as ‘at risk’. However, it is unclear whether HMRC intend to continue to allow the apportionment method that they have been allowing under the Protocol and if they do this should provide some additional scope to declare a portion of goods through the green lane. There does not seem to be any good reason why the UK would seek to remove this apportionment approach for those businesses that find it useful, unless the EU object.

Within the Windsor Framework, the UK Government have committed again to introducing a tariff reimbursement scheme in the coming months. Businesses have waited a long time for this much needed scheme and it should be expected that it will be delivered within this timeframe.

The new arrangements require safeguards which are built on three pillars

  1. trusted trader scheme (details provided above and specific criteria included in the new Joint Committee Decision),
  2. data sharing (as announced the EU will be given access to the UK IT system to access the relevant trade data) and,
  3. market surveillance with enhanced cooperation (the UK and EU have committed to an exchange of information arrangement). This will require relevant information to be provided to the EU on the 15th working day of the following month to which the information relates)

Tariff Rate Quotas (TRQs)

The issue of TRQs and not being able to access either EU or UK quotas on certain commodities has been a significant issue for some sectors, such as construction, manufacturing and sectors relying on cereals such as grain. This has been largely due to an oversight in the original Protocol implementation. An example of this is in respect of EU safeguarding measures which is giving rise to a 25% charge on steel imports to Northern Ireland.

This Windsor Framework confirms that the steel issue should now be resolved and that imports of steel into NI can avail of EU tariff rate quotas for steel, which will provide them with UK-origin steel in these categories which should disapply the current 25% safeguarding measure on imports of steel into the EU. A commitment has also been given by the UK and EU to resolve outstanding TRQ problems for other commodities based on evidence and data. 

Under the Windsor Framework the UK and the EU have agreed a simplified arrangement for certain agri-food retail products which are moving into NI for final consumption. Essentially those goods that can move using the new internal market scheme, or green lane for customs purposes should be able to avail of simplifications around regulatory procedures and checks which will be significantly less than would otherwise apply under full implementation of the Protocol. These simplifications can summarised as follows:
  • Use of a general certificate for mixed loads of agri-food goods, which would significantly reduce requirements around export health certificates and other documentation.
  • Identity checks will be significantly reduced
  • UK public health standards will apply for goods moved for end consumption to NI. This will allow certain products such as chilled meats and sausages to move into NI from GB, which was only provided for under a UK grace period

For those sectors, primarily retailers, where NI is the place of final consumption, the Windsor Framework should fix many of the problems they were facing. It should also mean that NI consumers will continue to have a wide range of choice of product on the shelves, as the blocking of certain products moving into NI should largely disappear where NI is the place of final consumption and the relevant business moving the goods meets the criteria set out.

For those agri-food sectors such as dairy producers, meat exporters who will clearly be moving products into the EU market, they will need to consider their supply chain and whether EU standards and rules need to be followed to comply with EU single market rules. These sectors will also need to monitor carefully new proposed UK and EU law changes due to the divergence implications this could have for them.

In order to provide safeguards to protect the EU single market, the UK have agreed to construct enhanced operational SPS inspection facilities by 1 October 2023 and final facilities by 1 July 2025 and to provide EU representatives with access to relevant IT databases. It will also be a requirement for those retailers that wish to avail of the simplified arrangements, to provide labelling on goods and in store advertising that these goods are “not for EU”.

The VAT, excise and state aid rule aspects of the Protocol have with the exception of a number of examples been working relatively well under the Protocol. The EU position is that in order for NI to have free access to the EU single market for goods, it must follow EU rules in areas such as VAT and excise to ensure that level playing field measures are adhered to. In a significant concession, the EU have agreed that these rules will be amended in certain areas where it creates problems.


In terms of VAT, the EU VAT rules under the Principle VAT Directive 2006/112/EC will still apply in NI for goods and as noted this is a requirement to trade into the EU in the same way that EU members do. However, under the Windsor Framework, existing provisions within the Withdrawal Agreement and Article 8 of the original Protocol have been used to make changes to Annex 3 to the Protocol and allow for carve outs from EU rules. This will mean that Northern Ireland will be able to avail of UK VAT rate changes which might otherwise not be allowed under EU VAT rules. An example of where this was creating some problems was when the UK Chancellor announced in the April 2022 budget that a reduced rate of VAT was being introduced on energy saving materials.

This change could not be introduced in Northern Ireland, as the EU VAT rules applied and it did not provide for a similar reduced rate on these products. The main VAT changes will be as follows:

  • Changes to allow reduced UK VAT rates in NI for energy saving materials such as heat pumps and solar panels that will be installed in immovable property in NI
  • Changes to allow reduced UK VAT rates in NI that are below minimum VAT rates allowed in the EU (currently 5%)
  • Changes to allow NI to follow any decision by the UK to set more than 2 reduced rates (including a zero rate). Under EU rules currently there can be no more than 2 reduced rates under Article 98 of the EU Principle VAT Directive. This will be subject to level playing field rules.
  • The UK and EU have agreed to explore the establishment of a wider list of goods that would follow UK VAT rates in NI, where these do not pose a threat to the EU market and the level playing field provisions
  • A permanent solution has been agreed for the second-hand vehicle market in NI. Although the margin scheme has continued to be used in NI since the Protocol came in, this is contrary to EU VAT rules for vehicles sourced in GB and sold in NI and has only continued under a grace period introduced by the UK. The permanent solution (referred to as the VAT-related payment scheme) will apply in NI from 1 May 2023. This should provide vehicle dealers in NI with the same outcome as under the old margin scheme. 
  • NI will not be required to apply the EU special scheme on small enterprises which is coming into effect on 1 January 2025
  • There will be a new Enhanced Coordination Mechanism which will be able to look at future EU rule changes and make further legally binding changes to resolve any potentially new distortive impacts it may have for Northern Ireland in the area of VAT and excise.

Importantly, the current rules and requirements set out under the Protocol and in HMRC guidance regarding VAT treatment of NI business supplies of goods to the EU and EU supplies of goods to NI businesses will continue. So XI VAT numbers, EC Sales Lists reporting, intrastat will remain as is currently the case. Supplies of services were not within the scope of the Protocol and as such will continue to follow the current UK VAT rules in full.


Some problems were identified in the area of excise duties under the Protocol, for example, the reduction of duty on beer in pubs in the UK budget in 2022 could not apply in NI under the Protocol. Under the Windsor Agreement certain EU excise duty rules will not apply in NI and can diverge from EU rules in line with the UK excise duty changes. This will allow reduced excise duty rates for all alcohol served for immediate consumption in hospitality venues in NI. The UK will also be able to apply its own small producer’s scheme for alcohol in NI. There will be a number of level playing field measures to protect EU minima rates. As noted already, excise will also be part of the Enhanced Coordination Mechanism to be set up under the Windsor Framework.

State Aid

This is another EU level playing field issue that was part of the Protocol which meant that EU state aide rules applied in cases where there is any aid provided to companies that could affect trade in goods and electricity between NI and the EU. The wording of the original Protocol had the potential to be much wider than intended and risked “reach back”. This meant that aid to a company in Great Britain that had some footprint in NI could have created a potential risk that this could be viewed as a state aid issue on which the EU could take action. Although this issue had not been a significant issue, it had been flagged as potentially giving rise to problems in future with the risk to support for trade between GB and NI.

The Windsor Framework, through a Joint Declaration on how the state aid provision under Article 10 (1) of the Protocol should apply, removes this risk and should mean that EU state aid rules should only apply in limited circumstances. This means that there must be a proven real, genuine and material link to Northern Ireland’s trade with the EU for the aid to be deemed to be in the scope of EU rules.

In recent weeks, a number of these issues have come to the fore and had the potential to prevent a new agreement being reached between the UK and the EU. However, the EU and UK have agreed a compromise position. It is important to note that without the application of certain EU laws Northern Ireland would not be able to avail of its unique access to the EU single market for goods. However, a number of mechanisms have now been included in the new agreement which means that not only will certain EU rules relating to customs, VAT, excise duties, state aid not be applied in agreed cases as set out under the Windsor Framework and related legal text; but in addition, new EU laws may be disapplied in some cases and the role of the ECJ should also be limited to that of final arbiter. 

The ‘Stormont Brake’ which will be included in a new Article 13(3a) of the Protocol is a new emergency mechanism which will allow the UK government, at the request of 30 Stormont MLAs, from at least 2 parties to request a stop to the application of amended or new EU customs, goods and agriculture laws in Northern Ireland. The Brake will operate on the same basis as a separate ‘Petition of Concern’ within the Belfast (Good Friday) Agreement. The Windsor Framework makes clear that this Brake can only be used in exceptional circumstances, and as a last resort, where it is shown to have a significant and lasting impact specific to the everyday lives of communities in Northern Ireland. If the Brake is triggered and the conditions are met, the amended EU law would not apply automatically in Northern Ireland. 

Once the EU has been notified that the brake has been triggered, the Joint Committee set up under the Protocol will discuss the implications and if the parties can’t agree either to add an amended or replacement act, the EU can take appropriate remedial action.  It is hoped that this mechanism will be used sensibly and is not something that can increase instability in the proper functioning of trade for businesses.

Local NI Business Voice

One of the most effective forums in putting forward the case for NI businesses has been the Northern Ireland Brexit Working Group (NIBBWG) of which KPMG is a member. The NIBBWG which is made up primarily of trade bodies has been influential in putting forward evidence based pragmatic suggestions to the negotiating teams.

During the past 18 months we along with the NIBBWG have consistently been providing key messages on what is required to develop Protocol solutions that work for the benefit of Northern Ireland in the long term. These included:

  1. Protecting households by preserving choice and affordability of goods from Great Britain for all of Northern Ireland’s consumers;
  2. Supporting producers to thrive by maintaining and preserving unfettered access to GB and EU markets; and
  3. A durable agreement:
    1. By removing unnecessary red tape and costs for all goods moving between GB and Northern Ireland that do not pose any material risk to the EU’s single market;
    2. By giving Northern Ireland a voice: in relation to EU and UK laws or policy impacting on NI trade; and
    3. By tackling divergence: creating mechanisms to ensure Northern Ireland is supported and protected with the long-term challenges of regulatory divergence.

What does the the Windsor Framework mean?

In our previous Brexit communications, we highlighted that any Protocol deal was always going to be sub-optimal to having full membership of the EU, however, we did say and still believe it provides protection for the many NI businesses trading primarily across the island of Ireland and/or with the EU as the status quo position was largely retained with the absence of any border checks, customs declarations or tariffs. Trade statistics show that many of these export-led businesses have generated growth in sales to the EU and cross border trade on the island of Ireland has flourished.

Until now the main problems and challenges with the Protocol have related primarily to the many NI businesses who trade primarily with GB and also issues for NI consumers. We therefore welcome the joint solutions reached in the Windsor Framework. Whilst the various grace periods have been broadly welcomed by local businesses, the legal basis for their continuance is uncertain which is not good for business stability and investment decisions.

This Windsor Framework has taken many of the problems and challenges arising under the Protocol currently and put in place a framework to deal with these. In our view this should significantly reduce the burden on businesses overall. In particular, it addresses the main issues for businesses that bring goods to Northern Ireland as an end destination which was one of the big asks from our retail and hospitality sectors. Clearly, there remain day-to-day complexities for businesses around customs, VAT, excise duties, SPS requirements for those that do significant trade with the EU, however, this is a consequence of Brexit which was always going to put up some trade barriers that were not there before. However, the revised Protocol position should in our view be a significant improvement on the Protocol as it stands.

It can only be hoped that with a settled position on the Protocol that this will now help to stabilise the economic landscape and help our businesses with their investment and growth plans, as well as getting our Stormont Executive back. We are aware through our contacts and KPMG global network, that there are potential investors seriously looking at Northern Ireland as a good place to do business and to benefit from the unique dual access to the UK and EU markets. We are hopeful that the Windsor Framework will help provide both local businesses and potential overseas investors with the required certainty and stability they need to make investment decisions.

We have always been of the view that the Protocol would be an evolving process which will require adjustments over time (and this was foreseen and provided for in the Withdrawal Agreement and original Protocol deal). Therefore, the Windsor Framework will no doubt have further challenges and new issues will arise in future, however, these issues should be dealt with in a measured way by all stakeholders, using the frameworks set out in the new agreement. That is how we will bring long-term economic stability and prosperity to Northern Ireland.

Get in touch

The pace of change is challenging leaders like never before. To find out more about how KPMG perspectives and fresh thinking can help you focus on key issues for your business or organisation, please get in touch with Johnny Hanna or Frankie Devlin. We’d be delighted to hear from you. 

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