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UK VAT return after Brexit

How to account in a UK VAT return for UK import VAT on goods coming from the EU after Brexit.

When the UK leaves the European Union following the 2016 referendum vote it will also leave the EU VAT regime. This means B2B cross-border sales and purchases of goods with business customers in the EU will no longer be treated as zero-rated intracommunity supplies. Instead, they will become exports and imports. The latter will incur UK import VAT at 20% for the first time.

The conditions for recovering import VAT include:

  • The imported goods are for use in the business; and
  • The business VAT registration number is shown on the customs declaration, or EORI number if using the Customs Handling of Import and Export Freight (CHIEF) system.

How to pay UK import VAT after Brexit

There will be two options for companies incurring import VAT on goods coming into the UK from the EU27, or from anywhere in the world:

  1. Pay the import VAT at customs to clear the goods into free circulation; or
  2. Use the Postponed Accounting scheme being launched by HMRC. This enables the importer of record to account for the import VAT in their next UK VAT return. This is shown under the 'reverse charge', avoiding the need for a cash payment of the import VAT.

You can account for import VAT when the goods enter the UK, or when they’re released into free circulation through one of the following customs special procedures:

  • customs warehousing
  • inward processing
  • temporary admission
  • end use
  • outward processing

If you use transitional simplified procedures (TSP) you must account for import VAT on your VAT Return.

How to report Postponed Accounting import VAT after Brexit in the UK VAT return

Once a UK VAT registered business has applied for Postponed Accounting, it will be able to download monthly statements of imports and related postponed import VAT. This can be entered in the VAT return as follows:

Box 2  VAT due in this period on imports accounted for through postponed accounting 

Previously ‘VAT due on acquisitions from other EC Member States’

Box 4  VAT reclaimed in this period on purchases and other inputs including imports 

Previously ‘VAT reclaimed on purchases and other inputs (including acquisitions from the EC)

Box 8  Total value of all exports of goods, excluding any VAT

Previously ‘Total value of all supplies of goods and related costs, excluding any VAT, to other EC member states’.

Box 9 Total value of all imports of goods, excluding any VAT

Previously ‘Total value of acquisition of goods and related costs excluding any VAT, from other EC member states’.

Need help with your UK VAT compliance?

Researching UK VAT legislation is the first step to understanding your VAT compliance needs. Avalara has a range of solutions that can help your business depending on where and how you trade. 

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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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