If you import goods into Great Britain from outside the UK or from outside the EU to Northern Ireland you may have to pay import VAT on goods. Businesses are required to incorporate VAT expense into their accounting and to ensure that it is paid correctly for every imported shipment.
HMRC recognise that this can place pressure on business cash flow so have introduced postponed VAT accounting. This, in effect, defers payment of VAT until their VAT return is submitted. Under this scheme, companies are not required to pay VAT when the goods are imported.
Who can defer VAT on imports?
If your business is registered for VAT in the UK, you can account for import VAT on your VAT Return for goods you import into Great Britain from anywhere outside the UK. No approval is required
How long can you defer VAT on imports?
Essentially, your VAT deferment period runs until your VAT return is due to be submitted. This means that if you import goods immediately after you have submitted your return, you may have almost 12 months until VAT on your recent imports is due.
However, if you import goods in the days prior to your return becoming due, then your deferment period will be considerably shorter. Your VAT deferment period runs from the date your goods are imported to the due date for your VAT return.
How to defer VAT on imports
To defer VAT through the postponed accounting scheme you will need to include your VAT registration number on your customs declaration and then select that you are deferring payment. Importers using the new CDS system will also need to supply their EORI number in any customs declaration. If the goods are in a special procedure, then this option can be selected when the declaration is signed to allow the imported products to enter free circulation.
A customs value will need to be declared on your clearances. Even if there is no commercial value of the goods, reasonable efforts need to be made to calculate the value of the goods. This will then be declared against your EORI number in order to account for the VAT amount.
If you use a customs agent to handle imports on your behalf they will need to be informed that you wish to postpone VAT to enable them to take appropriate action. When you complete your VAT return it’s important to remember to account for the import VAT that you have postponed. This will need to include details of any customs entries in your records and copies of your monthly statements which show the value of VAT postponed from the previous month.
How SSO International Forwarding can help
SSO International Forwarding provides a comprehensive import service to help simplify and speed up the import process. We’re committed to helping you find cost-effective ways to import goods and grow your business.
To find out more about how we can help you negotiate the import process contact us today.