VATLive > Blog > Blog Post > UK reconfirms Brexit VAT postponed accounting 2021

UK reconfirms Brexit VAT postponed accounting 2021

  • Mar 11, 2020

In today's UK annual budget, the Chancellor, Rishi Sunak, reconfirmed that VAT postponed accounting will be available to importers at the end of the Brexit transition period. This will be 31 December 2020.

The measure, also known as deffered import VAT, means not cash payment of import VAT is due. Most of the 27 EU member states also offer this scheme.

At the end of the transition period the UK will leave the EU VAT regime meaning imports from the EU would become subject to 20% 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, HMRC will 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.

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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