5. Postponed Import VAT

From 1st January 2021, the UK goverment has changed how collecting payments for import VAT will be handled.  

Imports with a value of £135 or less will have VAT applied at the point of sale, rather than applied as import VAT. For Business to Business (B2B) transactions, the VAT the on these transactions will been handled by Reverse Charge VAT.

For imports with a goods value over £135, businesses are able to apply Postponed Import VAT.

This is not mandatory and VAT on imports may still be paid at the tax point. If so, you will need to obtain the C79 certificates from HMRC for VAT Deferment, processing these and paying the VAT as VAT only purchase invoices. 

For those businesses using Postponed Import VAT accounting, you will need to change the way in which you complete the boxes on your MTD VAT return (see https://www.gov.uk/guidance/complete-your-vat-return-to-account-for-import-vat). You will be required to account for Import VAT on the return for the accounting period in which the goods were imported. To account for VAT on Postponed Import VAT you willl require your online monthly statement, or you will be required to estimate the amount if you do not have a  monthly statement and have delayed your customs declaration. 

To record Postponed Import VAT in axis diplomat, you will need to enter an adjustment to Input VAT and an adjustment to Output VAT. This can be acheived by using the function Enter Postponed VAT.

For help on setting up and making VAT adjustments please refer to our How To Videos.

The boxes of the VAT Return which require updating are:

BOX 1 - Include the VAT due in this period on imports accounted for through Postponed Import VAT. 

BOX 4 - Include the VAT reclaimed in this period on imports accounted for through Postponed Import VAT. 

BOX 7 - This will be the total value of all inputs including imports not including any VAT. This is updated by the booking of the invoice for the goods against the supplier.

The VAT adjustments will be entered in the base currency (sterling) with the goods value being zero and the VAT amount being the total VAT on imports for that period. The Output VAT adjustment will update Box 1 of the VAT Return and the Input VAT adjustment will update box 4. As detailed above, the value of imports for inclusion in box 7 will be created through the booking of  purchase invoice for the goods.

HMRC have published a new PVA Page on GOV.UK: ‘Get your postponed import VAT statement'. From there Importers will be able to acccess the statement service'. 

Business that already have access to the Customs Declaration Service (CDS) will be directed to the PVA statement page from this new page. Once the statements have been created, business will be able to view and download these statements.  

Businesses that do not already have access to the CDS, will be automatically directed to subscribe to CDS first.   

From the 1st January 2021, when an importer completes the customs declaration (on CHIEF or CDS) and advises that they will be accounting for import VAT on their VAT Return, that import VAT will be shown on their monthly PVA statement.   Statements will be published online in the first half of the month and will show the total import VAT postponed in the previous month.