APPENDIX 14
Memorandum submitted by the Northern Ireland
Office
INQUIRY INTO
FUEL SALES
Thank you for your letter of 14 June, in which
you requested information on behalf of the Committee about the
circumstances in which Republic of Ireland registered vehicles
may conduct business in Northern Ireland. Clarification was sought
following the oral evidence provided by representatives of the
Road Haulage Association and the Freight Transport Association.
As requested, the attached note summarises the
Community law framework applicable to cross-border road haulage
operations within the Community, and an explanation of the circumstances
in which a Republic of Ireland registgered operator can work within
Northern Ireland, and when a Northern Ireland operator can use
a vehicle registered in the Republic of Ireland.
An assessment is also provided of the practicality
of Northern Ireland road haulage operators relocating their businesses
to the Republic of Ireland in order to undertake work in Northern
Ireland and the rest of the UK while taking advantage of perceived
lower operating costs in ROI including rates of Vehicle Excise
Duty for certain large heavy goods vehicles—a practice commonly
referred to as "flagging out".
The attached response, provided by the Department
of the Environment for Northern Ireland, has been agreed by DETR
and Treasury officials, and cleared by Lord Dubs.
LICENSING OF GOODS VEHICLE OPERATORS IN NORTHERN
IRELAND
1. The European framework for licensing
international hauliers is set by EC Directives which establish
minimum requirements of professional competence, financial standing
and repute aimed at securing safety for the public and road users,
and at ensuring fair competition within Europe.
2. EC Directives 74/561/EC, 77/796/EC and
96/26/EC set the standards for admission to the occupation of
road haulage operator. The Road Transport (Qualification of Operators)
(Regulations) 1977, 1981 and 1991 amend Part III of the Transport
Act (NI) 1967 to apply the EU standards in Northern Ireland. EC
Directive 881/92 establishing the system of Community Authorisation
to enable international hauliers to operate across European national
boundaries was enacted in Northern Ireland by means of the Goods
Vehicles (Community Authorisations) Regulations 1992 which gave
the effect to this directive in the United Kingdom.
INTERNATIONAL HAULAGE
IN EUROPE
3. A haulier from any member state of the
European Union is permitted under European law to undertake haulage
of goods to, from or across other Member States and cabotage within
another Member State on a temporary basis provided he holds:
(i) an international operator's licence;
and
(ii) a Community Authorisation;
From the member state in which he is licensed. Cabotage
is defined as domestic or national work and involves a journey
which starts and finishes within another member state.
4. It follows that a Northern Ireland haulier
with an international operator's licence, and a Community Authorisation,
issued by the Department of the Environment for Northern Ireland
can undertake international work between the United Kingdom and
any other member state and cabotage within another Member State
on a temporary basis. Similarly a haulier from the Republic of
Ireland with an equivalent international operator's licence and
Community Authorisation from the competent authorities in the
Republic of Ireland can legally engage in international haulage
within Europe and cabotage within other Member States (including
the United Kingdom) on a temporary basis.
RE -REGISTRATION
OF VEHICLES
OUTSIDE THE UNITED
KINGDOM
5. In addition, the Department of the Environment,
Transport and the Regions and the Department of the Environment
for Northern Ireland permit Great Britain and Northern Ireland
operators respectively to place goods vehicles which have been
registered in other Member States on their national operator's
licences.
6. Any such vehicle, properly registered
in another member state, would not be liable for Vehicle Excise
Duty (VED) in the United Kingdom provided it is used solely for
international journeys. It must not be used for domestic journeys
within the United Kingdom otherwise liability for VED in the United
Kingdom would arise. By accepting a vehicle registered in another
Member State on a Great Britain or Northern Ireland operator's
licence the intention is to facilitate UK operators who wish to
undertake international haulage work without their having to establish
a subsidiary in or relocate their business to another Member State.
It must be emphasised that exemption from VED in the United Kingdom
is dependent on a vehicle being brought temporarily into the United
Kingdom by a person resident abroad. This gives limited scope
for use by Great Britain and Northern Ireland operators of this
facility and then only for international operations.
"FLAGGING OUT"
7. "Flagging out" is the term
used to describe the relocation of a road haulage business from
one Member State to another, or the establishment of a subsidiary
in another member state to take advantage of perceived lower operating
costs there. In reaching a decision to "flag out" an
operator must assess the relative overall advantage for his business
and should take into account many factors including the likely
operating cost and wage rates in the country to which he proposes
to relocate, relevant business and personal taxes, the requirements
for, and availability of, international haulage permits, as well
as operator licensing and registration costs and vehicle excise
duties. In addition, any decision will be affected by the nature
and structure of the operator's current business and the likely
impact of relocation on the growth and future development of his
business.
8. Furthermore, likely future adjustments
in relative exchange rates and the potential for legislative changes
may have a bearing on the decision. There will also be one-off
costs associated with setting up a business in another Member
State which will need to be taken into account, including the
cost of establishing an operating centre. This is a complex decision
and whether or not it makes good business sense will depend to
a large degree on the particular circumstances of each individual
operator.
Department of the Environment
for Northern Ireland
1 July 1999
| 
