In a no-deal BREXIT scenario, “postponed accounting” for Import VAT will be introduced for imports from the EU and Rest of World
What is “postponed accounting”?
If the UK leaves the EU without an agreement, the government will introduce postponed accounting for import VAT on goods brought into the UK. This means that UK VAT registered businesses importing goods to the UK will be able to account for import VAT on their VAT return, rather than paying import VAT on or soon after the time that the goods arrive at the UK border. This will apply both to imports from the EU and non-EU countries.
Why is the governement introducing “postponed accounting” for VAT?
In a No-Deal scenario, companies previously trading with the EU wouldn’t have had to make allowances for payment of import VAT in their cashflow forecasts. The government has taken account of the views of businesses and sought to mitigate any adverse cash-flow impacts keeping VAT processes as close as possible to what they are now.
Does this apply to trade with the EU only?
No, in a No-Deal scenario, postponed accounting will be applied to ALL imports from EU and non-EU countries alike. To ensure equity of treatment, in a no deal scenario, businesses importing goods will be able to account for their import VAT from non-EU countries in the same way, which will help UK businesses make the most of trading opportunities around the world.
What is changing?
- Business will not need to register to use postponed accounting. They will simply make the appropriate entry and provide their VAT registration number on their customs declaration
- An online monthly statement will show the VAT that’s been postponed. This will provide the evidence to declare/ recover import VAT on your VAT return
- Postponed accounting won’t be available for postal goods of £135 or less
- Postponed accounting won’t be available for non-VAT registered businesses
- For exports, businesses no longer need to complete EC sales lists, but will need to review the rules in individual member states that apply for import VAT
- The UK would stop having access to certain EU VAT IT systems – but a new UK VAT registration number checker will be available
Where can i find more information about preparing for BREXIT?
HMRC have provided a tool for helping businesses prepare for BREXIT. it can be found here: https://www.gov.uk/business-uk-leaving-eu