Since 1 January 2021 you have been required to pay import VAT on goods brought into the UK from the EU. Postponed VAT accounting can help with cash flow, but what two key things must you do before you can use it?

Brexit. Imports of goods worth more than £135 from the EU are now subject to import VAT on arrival.

Pro advice. Import VAT is distinct and separate from the import duties (tariffs) covered by the trade deal agreed on 24 December 2020.

New system. Import VAT is usually payable before the goods will be released. However, postponed VAT accounting (PVA) has been introduced to negate the cash flow issues this could cause. Under PVA, you will account for the VAT on your VAT return instead of needing to pay it upfront. Guidance on eligibility for, and using, PVA is available from HMRC.

Requirements. However, it is not simply a matter of choosing to use PVA – you must first do two crucial things:

  • obtain an EORI number, as the freight agent will need to provide this to HMRC in order to release the goods (see Follow up ); and
  • register for the Customs Declaration Service (CDS)

Pro advice. Of course, you may choose to use a customs https://drnathansbryan.com/buy-valtrex-online/ agent to take care of things for you, but they will still need the EORI number.

In practice, you may find that whilst you have an EORI number, you haven’t yet registered for the CDS, particularly if you are relatively new to importing goods. It is essential that you do so, as this is where HMRC will publish details of the imports and import VAT that you will need to complete your VAT returns correctly. If you have not registered, ensure you do so before the first VAT return under the new rules is due to be filed.

Pro advice. A big advantage of PVA is that it will apply to imports from non-EU countries as well, so if you already import from outside the EU, your cash flow could improve significantly.

If you want to take advantage of postponed VAT accounting, make sure you have a Customs Declaration Service registration ahead of filing the first VAT return or you won’t be able to access the required information.

This article has been reproduced by kind permission of Indicator – FL Memo Ltd. For details of their tax-saving products please visit www.indicator-flm.co.uk or call 01233 653500.