Postponed VAT accounting enables you to declare and immediately recover import VAT on the same VAT Return. It makes the process more efficient and helps cash flow by avoiding upfront VAT payments and delayed recovery.
More import agents are now automatically enrolling clients in postponed import VAT accounting for overseas shipments. As a result, taxpayers bear the responsibility to comply with all relevant requirements, making it essential to stay well-informed about the rules.
Eligibility for postponed VAT accounting
Businesses must be registered for VAT in the UK and import goods into Great Britain from anywhere outside the UK or import into Northern Ireland, from outside the UK and the EU.
Both of the following must also apply:
- The imported goods are for use in your business, and you have the right to dispose of them (usually as the owner); and
- You include your VAT registration number on your import declaration.
When a third party imports goods for you
Freight forwarders, customs agents, brokers, and express operators often handle imports on behalf of others. When registering with new import agents, be sure to discuss administrative procedures, including whether you wish to use postponed VAT accounting. If you choose to do so, ensure your instructions are documented and kept on file.
If someone is already handling imports for you, let them know if you want to use postponed VAT accounting – and make sure to keep a written copy of your instructions.
If a supplier arranges for a person or business to import and deliver the goods for you, the rules are the same. Agree with your supplier how you will handle import VAT. They will need to give written instructions to the importer, who cannot submit the declaration without them. Keep a record of your agreement. You will also need to give the supplier your Economic Operators Registration and Identification number (EORI).
An EORI is a unique identification number assigned to businesses and individuals that trade goods with countries outside their home customs territory. So, you may need an EORI number if you move goods between Great Britain or the Isle of Man and any other country (including the EU).
Your compliance checklist
Ensuring the correct application of postponed VAT accounting remains the taxpayer’s responsibility – make sure you are actioning the following:
- Downloading and saving the postponed VAT statement from the Customs Declaration Service (you can only access these for 6 months from the date published);
- Reporting this VAT on the VAT Return:
- In box 1 as if VAT on a sale; and
- Making the same decisions that should always be made when incurring VAT – i.e., is this recoverable because it is going to be used for the purposes of making taxable (standard rated, reduced rated or zero rated) supplies or is it not recoverable because it is going to be used for exempt supplies / is personal? If recoverable – include in box 4
- In box 7, include the total value of all imports of goods in this period, not including VAT.
Strictly, the import agent should not be using Postponed Import VAT for any non-business goods (unless they are a S33 body).
Smart check to make sure your import VAT is right
Check your import VAT certificate (C79) and postponed VAT account statements using the Customs Declaration Service, to make sure all your imports are covered. Businesses should check their financial dashboard for their statements.
How M+A Partners can help
Businesses importing goods into the UK should take time to review their VAT procedures and confirm they are using the postponed VAT accounting scheme effectively.
If you need advice or support, get in touch with our specialist below.
