Since 1 January 2021, businesses registered for VAT that import goods into the UK from anywhere in the world can use a new system called postponed VAT. This lets traders account for the VAT on their VAT Return, rather than paying it immediately (e.g. at the time of import/entry).
The postponed VAT accounting system aims to avoid the negative cash flow impacts on businesses that are hit by this additional VAT bill and will avoid having goods held in customs until the VAT is paid.
Rather than physically paying import VAT and then reclaiming it on the subsequent VAT return, the VAT is accounted for as input and output VAT on the same return.
HMRC and Irish Revenue will issue monthly C79 reports stating the VAT amounts that have been postponed so that traders can easily identify the amounts that need to be declared on their VAT returns.
HMRC have confirmed that the following boxes must be completed on the VAT returns.
Box 1 – VAT due on sales and other outputs – Include the VAT due in this period on imports accounted for through postponed VAT accounting.
Box 4 – VAT reclaimed on purchases and other inputs: Include the VAT reclaimed in this period on imports accounted for through postponed VAT accounting.
Box 7 – Total value of purchases and all other inputs excluding any VAT: Include the total value of all imports of goods included on your online monthly statement, excluding any VAT.