If you’re a VAT-registered business that imports things from outside the UK, you may find that you’re now dealing with a much higher volume of Import VAT due to Brexit. If so, you may find the Postponed Import VAT scheme of use to you.

If you buy things, then you are buying goods. Services and software are not goods. When you are buying the goods from outside the UK, you are importing them. When HMRC says you owe VAT on the goods you imported, then you are paying Import VAT. If you owe Import VAT either the courier or HMRC will send you a bill breaking down your Import VAT, duty and other charges. You can claim the Import VAT back on your VAT Return. You cannot claim back duty or other charges.

Before Brexit, it was only when goods were purchased from outside the EU that businesses had to pay Import VAT. But now with Brexit, businesses in Britain will see Import VAT applied to purchases from the EU as well as from the rest of the world. It’s possible that this may cause cash problems for these businesses.

If you have a long time between paying the Import VAT and selling the goods, then you may find that sometimes you wish you didn’t have to pay the Import VAT right away. This might happen if you are constructing something out of the goods you bought, or if your business has slow periods at different times of the year.

The good news is that HMRC has recognised that small businesses may not always be able to pay their Import VAT right away. That’s why they have introduced Postponed VAT accounting.

Under Postponed VAT accounting, you don’t pay the Import VAT right away, but instead declare it on your VAT return so that you both “pay” and “claim back” on the same form.

Your VAT return will look as if there were no Import VAT at all, just your UK sales and purchases. You won’t get that big reclaim you might have been seeing, but you won’t have to pay up front anymore either. You’ll still have to pay the duty and other charges.

If you are a VAT registered business who sees a lot of Import VAT and has variable cashflow, then this system might work for you. We can help look at your business’s cashflow and Import VAT levels to help you determine if this is something you wish to go with. Get in touch and we’ll see how we can help.

Is Postponed VAT Accounting For You?