Until the end of 2020, goods arriving in the UK from the EU were not subject to customs duties, and VAT was accounted for quite simply on VAT returns as “acquisition VAT”. Goods imported from a non-EU location were subject to import VAT and duties payable at the port and time of entry. Import VAT was treated a separate payment and collected as a duty of customs. To reclaim this, the importer required a C79, sent by post from HMRC detailing the VAT paid. This was issued to the named importer based on the import declaration, where the importer’s EORI number should be declared.
From 11pm on 31 December 2020, goods arriving from the EU are now treated as imports. Following the Free Trade Agreement (FTA) with the EU, duties should not apply to EU “origin” products. Importing from the rest of the World, will generally remain unchanged.
A new postponed import VAT accounting procedure, detailed below, will be available to account for import VAT more easily and cheaply. In some cases, the previous import VAT procedure will remain.
Imports from the EU into GB (England, Scotland, Wales) will see significant changes *. In summary, post-Brexit:
*NB In Northern Ireland more complexity will apply as it will remain part of the single market for many aspects. Those affected by trade involving NI should seek additional advice.
The new import procedures for EU imports into GB will be introduced in three stages in 2021 (in effect creating a 6-month transitional period), in:
2) April; &
These phased measures will apply to imports of EU goods only. Imports of non-EU goods will remain unchanged and subject to full import controls as before. Import declarations for customs purposes will be required for goods from the EU. After the six-month transitional period, carriers will be legally responsible for ensuring Entry Summary Declarations are submitted pre-arrival to HMRC at the time specified by mode of transport.
In effect, the 6-month transition period permits importers breathing space to submit customs declarations and pay any duties that will apply from 1 January 2021. Many checks will take place away from the frontier.
From this date pre-notification and the relevant health documentation will be required for all products of animal origin (POAO), e.g.
(ii) Pet food,
(v) Egg products, &
(vi) All regulated plants and plant products.
At present, import VAT paid at the point of entry into GB is reclaimed from HMRC by the importer upon receipt of a C79 form. This can take 6 weeks or longer to arrive. A cash-flow delay is created.
Postponed import VAT accounting will require simple entries on the VAT return showing import VAT due to HMRC and, for most businesses, the same VAT reclaimable from HMRC. Unless the importer faces a general restriction on VAT recovery, this should be a simple paper exercise. Postponed import VAT accounting will apply to all imports, i.e., from non-EU and EU countries from 1 January 2021.
However, this procedure is not automatic. Importers will need to select this option on their customs declaration, or request that their customs agent do this when completing the declaration. It is important that the customs declaration show the importers VAT number and/or EORI number.
This process will apply for the import of goods into GB from outside GB, and the import into NI for goods from outside the UK and EU. NB NI will remain in the single market so the new rules will not apply there for EU goods. The position in NI is more complicated so advice is recommended.
In some cases, it is compulsory to use postponed import VAT accounting. This applies where the importer imports non-controlled goods into GB between 1 January and 30 June 2021 and:
Importers will need to select on the customs declaration the requisite option for this method of accounting for import VAT, or where using agents, should instruct them of their preference.
The £15 limit for duty and VAT free imports has been scrapped. Imports in consignments valued at £135 or less will be subject to a range of new rules, which are covered separately.
Postponed Import VAT Accounting will generally apply to all imports i.e., from non-EU and EU countries from 1 January 2021. It will be compulsory in certain cases but not all. Please contact your usual VAT contact for more information.
Please note that these rules are subject to change.