Businesses which import goods for business use have been able to use Postponed VAT Accounting since January 2021. Postponed VAT Accounting enables you to both declare and recover VAT on the same VAT return instead of paying the VAT before you receive the goods and recovering the VAT on your next VAT return.
This is a significant change for businesses and their cash flow. Previously businesses may have had to be pay hundreds or thousands of pounds in import VAT which they could not reclaim until those payments could be included on their next VAT return with the import VAT certificate (C79) as supporting evidence.
Importing Goods
Since January 2021, as long as you have advised the organisation which deals with the importing on your behalf that you want to account for import VAT using Postponed VAT Accounting and they have completed the customs declaration accordingly, you will not have to pay the import VAT prior to receiving the goods.
If your supplier arranges for someone to import goods on your behalf you do need to advise your supplier that you wish to use Postponed VAT Accounting so that they make the appropriate entry on the customs declaration.
Completing your VAT Return
Although you haven't paid any import VAT for the goods received the import VAT still has to be declared on your VAT return. However now it is declared and reclaimed at the same time using the monthly postponed import VAT certificates which must be downloaded from your HMRC VAT account.
The figure on each of these monthly certificates is the amount to be included in Box 1 and Box 4 of your VAT return. Box 7 must include the total value of imports during the period excluding VAT.
Note: Goods imported by Royal Mail/Parcelforce will have VAT charged on import as they are not set up to deal with Postponed VAT Accounting. This VAT will be claimed back on your VAT return as before.
Goods imported are £135 or less
If a single consignment is imported which is valued at £135 or less, VAT will be charged at point of sale unless you have provided the supplier with your VAT number. In this instance "Reverse Charge VAT" will be shown on your invoice and you will report this as both a sale and a purchase on your VAT return.
Further details
More information on reporting Reverse Charge VAT is available from HMRC website.
