Sally Atkins, VAT consultant at Croner Taxwise explains the options available to importers for dealing with import VAT post-Brexit, following confusion regarding the difference between a VAT deferment account and a new reverse charge.
There are now three possibilities for businesses importing goods from both the EU and third countries, that is, anywhere in the world:
- The original procedure which is still in use, requires the importing business to pay the import VAT on clearance of the goods into free circulation and then claim it back on the VAT return (subject to the usual rules regarding VAT recovery) using the C79 certificate as evidence, which is posted to the registered address of the importer usually within 3 weeks following the end of month of importation.
- The second option is to set up a deferment account. A duty deferment account can be applied for to delay paying charges, such as customs duty, excise duty as well as import VAT.
A deferment account lets you make one payment a month through Direct Debit instead of paying for individual consignments. In some cases a guarantee waiver can be applied for to avoid the need for a financial guarantee. More information can be found at https://www.gov.uk/guidance/check-which-type-of-account-to-apply-for-to-defer-duty-payments-when-you-import-goods#apply-to-defer-import-vat. The VAT can be claimed back as above on the relevant VAT return with a C79 certificate as evidence.
- Finally and arguably the most attractive option is to use the Postponed Import VAT Accounting (PIVA) procedure. This was introduced on 1.1.21 as a measure to expedite the volume of imported goods following Brexit and to improve the cashflow implications for businesses and it can be used equally by non-established taxable persons with a UK VAT registration.
Instead of paying over import VAT and waiting to claim it, the importing business should ensure the Customs declaration is appropriately completed to choose the postponed method; it should apply to download its monthly postponed import VAT statements and then complete a simple reverse charge procedure on its VAT return in Boxes 1, 4 (provided recoverable subject to the normal rules) and the net value in Box 7.
If businesses initially declare goods into a special procedure, such as customs warehousing or temporary admission, the PIVA procedure can be used to account for import VAT on the VAT Return when the declaration is submitted to release those goods into free circulation.
Further information can be found at the following links:
https://www.gov.uk/guidance/complete-your-vat-return-to-account-for-import-vat
https://www.gov.uk/guidance/get-your-postponed-import-vat-statement
Source: Croner Taxwise
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