UK import VAT clarification

The UK’s HMRC has provided guidance on who can reclaim or deduct import VAT on goods entering the UK from outside the EU. Post-Brexit, this will include goods coming from the remaining EU 27 states.

HMRC has clarified that only the importer of record may reclaim any import VAT paid. This should be the owner of the goods. HMRC had identified two situations where this rule is not being followed:

1. Toll operators who import and distribute goods for their customers. They do not take legal ownership of the goods. They do pay the import VAT, but this does not entitle them to use that as a deduction in their own VAT liability. Their customer should reclaim the VAT either through their UK VAT registration or a 13^thDirective VAT reclaim.
2. Sales before importation, where the vendor makes a sale immediately before they import the goods and make them available to their customer once cleared into the UK.

In both the above cases, the import VAT certificate, C79, has listed the importer of record wrongly. It should be the owner of the goods who should have been declared on the C79.

HMRC will allow affected companies until 15 July 2019 to make appropriate amendments to their systems.