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UK Brexit postponed accounting law for import VAT

  • Jan 23, 2019 | Richard Asquith

UK issues Brexit postponed accounting law for import VAT

The UK government has issued the statutory instrument to implement the no-deal Brexit postponed accounting deferred import VAT regime. The system was originally committed to in August 2018 in the case the UK parliament failed to implement the Withdrawal Agreement agreed by UK and EU leaders.

In the case of a no-deal Brexit on 29 March 2019, the UK would leave the EU VAT regime meaning imports from the EU would become subject to UK import VAT for the first time. This VAT would be due for payment before the goods were permitted to clear UK customs.

To alleviate this potential new cash flow burden, the statutory instrument permits the importer of record, who is liable for the import VAT, to instead account for the VAT in their subsequent UK VAT return using the reverse charge mechanism. This would mean no cash payment for the import VAT. The importer would need to indicate their VAT number in the import declaration documentation. The importer will be able use the existing Value Added Tax Regulation (1995) estimation methodology to determine the value to declare.

The HMRC Commissioners reserve the right to withdraw the right to use the postponed accounting option for any particular tax payer.

Changes to VAT return for postponed accounting

The instrument indicates how importers should record the postponed accounting for VAT in their VAT return. Box 1, output VAT, and Box 4, input VAT, will be modified to capture the VAT values of imports under the scheme.

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VP Global Indirect Tax
Richard Asquith
VP Global Indirect Tax Richard Asquith
Richard Asquith is VP Global Indirect Tax at Avalara, helping businesses understand their compliance obligations as they grow globally. He is part of the European leadership team which this year won International Tax Review's Tax Technology Firm of the Year. Richard qualified as an accountant with KPMG in the UK, and went on to work in Hungary, Russia and France with EY.
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