Import VAT
Ian Simmonds • 14 September 2020
Import VAT: Postponed VAT Accounting
The Government announced, during the Budget, that on 1 January 2021 Postponed VAT Accounting (PVA) will be introduced on imports. Currently, imported goods from a non-EU country are liable for payment of import VAT at the same time as customs duty. However, importers can defer to the fifteenth of the following month the payment of the customs duty and import VAT by using a duty deferment account (if available to them).
The Government have stated:
The introduction of PVA will enable importers to account for and recover import VAT as input tax on the same periodic (usually quarterly) VAT return, rather than having to pay it upfront and recover it on a subsequent return using the C79 VAT certificate as evidence of entitlement.
These changes will not affect non-VAT registered importers and individuals who must continue to pay (or defer) import VAT on imported goods at the same time as the customs duty, as they do now.
The process will provide importers with a new cashflow benefit, as they will be able to postpone VAT at the time of import, as opposed to paying it immediately upon importation. Importing businesses should note that this new process does not only cover goods arriving from non-EU countries, but also goods coming from the EU after the 1 January 2021.
How will the PVA work?
The Government have stated:
All UK VAT registered Importers will be eligible to use PVA; no authorisation will be required. They will simply make the appropriate entry and provide their EORI and/or VAT registration number (VRN) on their customs declaration. This process (subject to customs clearance) will allow the goods to enter into free circulation without up-front payment of the import VAT. The customs declaration will generate an online Monthly Postponed Import VAT Statement (MPIVS) that will be the evidence required to account for and recover the import VAT as input tax on their next VAT return. (Note: The C79 will continue to be produced for those entries where any VAT is paid on importation).
Will there be a staged approach?
There will be a staged approach from 1 January 2021 until 30 June 2021. The Government have stated:
UK VAT registered Importers who import standard (non-controlled) goods into GB from the EU and who make an Entry in Declarants Records (EIDR) under the staged approach to import controls will be required to use PVA to account for the import VAT on those goods. Making the EIDR allows the VAT registered importer to defer submission of their supplementary declaration by up to 6 months from the point of import, and they will be required to use PVA irrespective of when they submit their supplementary declaration.
Where the importer does defer their supplementary declaration, they will not have an MPIVS when they complete their VAT return. They will therefore need to use the information on their EIDR or other commercial import records to estimate the amount of import VAT due and account for that tax on the VAT return relating to the month of import. (For example; the import VAT on goods imported in January 2021 will be accounted for on the VAT return that covers January 2021).
When the deferred declaration is subsequently submitted the actual amount of import VAT will be calculated and tax due to be accounted for will be recorded on the MPIVS for the month the declaration is submitted. This should be compared to the estimated amount and any adjustments required should be made on the next VAT return.
If you would like more details, please call +44 (0) 118 932 8447 or email info@icslogistics.co.uk
We provide IOR services for foreign importers and take care of every phase of the importation from customs clearance to the payment of duties and taxes. As the IOR for your products we are responsible for all paperwork relating to import of your products, customs classification and we will arrange the payment of duties and taxes.
A manufacturer in Germany supplies EU qualifying products to a GB company and zero tariffs applies. The GB company places the products within their common stock warehouse and later they are purchased by a company in the Republic of Ireland. Under the TCA rules of origin for preferential trade, these goods when imported into Ireland are not covered by the agreement and full tariffs apply.
Not having clearly defined export / import processes with the EU caused unnecessary documentation issues resulting in long delays at the ports and some vehicles being sent back to the UK. Exporters of food products from Great Britain (GB) were especially impacted due to their Export Health Certificates (EHCs) not being compliant with EU import regulations. Food exporters and their Official Veterinarians complete and issued these certificates in compliance with the directives of the Department for Environment Food & Rural Affairs.
We have been developing contingency plans to ensure our customers’ products are delivered correctly after 1 January 2021. Significant changes will occur once the UK has left the EU. All UK businesses will be required to provide Customs documentation for products exported to, or imported from the EU, even with the ‘EU Deal’ on Brexit.
ICS, as part of our customer services, will be supporting companies with the necessary Customs documentation to comply with the new regulations.
XI EORI required for Northern Ireland.
The Government have confirmed that businesses moving goods to or from Northern Ireland (NI) will need a special EORI number with a ‘XI’ country prefix.
On 14 October, the Government published the requirements for submitting Intrastat declarations after 1 January 2021. There will be no Intrastat requirement for the movement of goods exported from GB to the EU or goods imported from EU to GB, from 1 January 2022.
The UK Government has updated the rules for wine importers, exporters, producers, retailers and distributors, as from 1 January 2021.
The UK Government have stated that on 1 January 2021 the transition period with the European Union (EU) will end and the United Kingdom (UK) will operate a full, external border as a sovereign nation. This means that controls will be placed on the movement of goods between Great Britain (GB) and the EU.
The UK Government have recognised the impact of coronavirus on UK businesses’ ability to prepare and therefore have announced that they will implement full border controls on imports coming into GB in three stages up until 1 July 2021.
The UK Government has now released their new Import and Export Guides for the end of the Transition Period. The guides have been designed to provide a step-by-step process and aim to provide clarity around what is required at the end of the year. When it comes to following the new import / export processes and completing your Customs declarations, we can provide you with assistance and support.
Your choice of Incoterms® 2020 will be an integral part of your commercial transaction stated within the contract.
By the parties agreeing the relevant Incoterms for the international supply chain and then incorporating it into the contract, the buyer and seller will understand responsibilities in the event of loss and damage.
The seller and buyer can include Incoterms in their contract to cover who is responsible for every stage of the international supply chain, including customs clearance and insurance requirements. Incoterms also make it clear who pays for each different cost within the international supply chain.