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The end of the Brexit transition period means there are changes which VAT registered businesses must be aware of. The changes include the introduction of postponed VAT accounting for VAT registered importers.

In this guide, we explain what postponed accounting is, why it’s now in place, and how to use it. Learn more about the other VAT changes in our article What Does Brexit Mean for VAT and Businesses?

What is postponed accounting?

UK VAT registered businesses can use postponed accounting to account for import VAT on goods worth more than £135. It means that VAT registered businesses can account for import VAT on their VAT return, rather than paying it upfront at the border.

Postponed accounting for import VAT became available on

1st January 2021.

 
There are different rules for paying VAT on shipments worth less than £135. Read our article about the new rules for VAT on low value goods imports.

Can businesses in Northern Ireland use postponed accounting?

VAT registered businesses in Northern Ireland can use postponed accounting on imports from outside the UK and the EU. VAT, and the way that businesses account for it, won’t change on goods moving between Northern Ireland and the EU.

 
comprehensive vat returns service

Why did the government introduce postponed accounting?

The EU has special VAT rules which aim to encourage trade between member countries. Now that the Brexit transition period is over, the UK is no longer a member of the EU VAT area.

Goods crossing the UK/EU border are now imports or exports.

 
This means UK businesses must now pay import VAT when importing goods worth more than £135, even if they’re importing from the EU. This is on top of any customs and excise charges that are also due.

The government brought in postponed accounting to help businesses adjust to the change. In doing so, postponed accounting aims to reduce the impact which import VAT can have on a business’ cash flow.

How does postponed accounting for VAT work?

Rather than paying import VAT on goods at the border, and then reclaiming it on your next VAT return, you ‘postpone’ the import VAT. This means that you’ll account for the import VAT and recover it, all on the same VAT return. You won’t need to make a physical payment for the import VAT when your goods reach the UK border.

An important note for completing your VAT return

You’ll need copies of your monthly postponed import VAT statements to complete your VAT return.

Your import VAT statements will only be available in your online account for six months after they’re published.

 
Make sure you download your statements! You won’t be able to postpone the VAT on your return without the statements. You’ll need a Government Gateway account which is linked to your EORI number to access your import VAT statements.

Do I need to pay customs duty if I use postponed accounting?

Postponed accounting only deals with import VAT, so you will still need to pay customs duty on goods you import. You may be able to defer the customs duty into monthly payments. The business will need to register with HMRC for a duty deferment account to do this.

Learn more about using the Customs Declaration Service.

Can I use postponed accounting if I’m not VAT registered?

Only businesses with a VAT registration can use postponed accounting for import VAT. If you’re not VAT registered, you’ll still pay import VAT at the border.

 

Infographic explaining your eligibility to use postponed accounting

Do I need to change my VAT registration to use postponed accounting for import VAT?

You don’t need to get special permission to start accounting for import VAT on your VAT return. Just make sure that:

You must have an EORI number to move goods between Great Britain (Wales, Scotland, and England) and other countries. We explain EORI numbers in more detail in our article about what Brexit means for EORI registration.

Postponed accounting and special procedures

Postponed accounting is also available if you use ‘special procedures’ to import in to the UK, and submit a declaration to release your goods.

Special procedures include:

Do VAT registered businesses need to use postponed accounting?

Postponed accounting is optional in most cases, so you can still pay import VAT upfront at the border if you prefer. If you defer customs declarations, then postponed accounting is a requirement.

Can I still reclaim import VAT without postponed accounting?

If your business is VAT registered, you can still reclaim import VAT that you pay at the border on your VAT return. You’ll need a C79 certificate, which shows the amount of import VAT you’ve paid. Where you get your certificate from depends on how you make customs declarations.

Visit the GOV.UK site to find out how to get your C79 import VAT certificate. Remember, you can only reclaim import VAT or use postponed accounting if your business is registered for VAT.

How do I show postponed accounting on my VAT return?

It’s essential that you download the monthly postponed import VAT statements in order to complete your VAT return.

Import VAT statements are only available for six months.

Make sure you download your statements!

 
You’ll need a Government Gateway account which is linked to your EORI number to access your import VAT statements.

Completing your VAT return

You’ll account for the import VAT you postpone when you complete the VAT return for the accounting period covering the import date.

What do I put in Box 1 for postponed accounting?

Show the postponed VAT which is due on imports for this period. This is the import VAT that is due, that you chose to postpone, rather than paying at the border. The information will be available on your monthly statements for postponed import VAT.

You don’t need to complete Box 1 if you didn’t postpone the import VAT – just Box 4 and 7.

Box 4

Provide the amount of VAT you are reclaiming through postponed accounting on imports in this period.

Box 7

This is the total value of all imports on your online monthly statement, excluding any VAT.

Why are there imports missing from my postponed accounting report?

If you deferred the customs declarations, the imports won’t show on your postponed accounting reports. You do still need to include them on your VAT return though. You will need to estimate the import VAT for this VAT return, and then correct it on your next one.

Find out more about our VAT accounting services for businesses. Talk to one of the team on 020 3355 4047, or get an instant quote online.

About The Author

Beth-Anne Bruce

I'm an experienced and fully AAT and ACCA qualified accountant, who is enthusiastic about helping business owners succeed. I also love cooking and needlepoint (at different times!). Learn more about Beth.

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