Import VAT
Changes
On 1 January 2021, Import VAT in the UK
underwent two significant changes:
1.
Purchases from the EU now attract
Import VAT (and Duty) and are no longer
accounted for as Acquisitions
2.
Postponed Import VAT Accounting (PIVA)
is now available for imports from any
country – however there are several steps
that must be taken to benefit.
Key Concepts
Import VAT is a form of duty. When a good is imported, a VAT liability will typically be due which along with other duties, must be paid to allow the goods to be released into the country.
The goods can enter the country before payment has been made where a duty deferment account has been used. This allows for payment of import VAT and duties to be deferred until up to the 15th of the month following the date of import. A business may apply to operate their own deferment account, though would need to qualify for a waiver to ensure HMRC do not require a guarantee against any amounts deferred. Where a business does not hold its own deferment account, your freight forwarder may use their own deferment account on your behalf and will normally charge a small additional fee on a per consignment basis.
Any customs duties that apply will be an outright cost, however your business will be able to reclaim import VAT as long as:
• Your business is the owner of the goods
• The goods are being imported for a taxable purpose • Your business is the importer of record and your EORI number has been quoted on the customs declaration • Your business holds evidence in the form of a HMRC form C79 or PIVA Monthly Statement
If you are a fully taxable business, you will be able to reclaim your VAT in full.
How you go about accounting for and recovering your import VAT liability will depend on whether or not you have elected to used Postponed Import VAT Accounting (PIVA).
Continued
The following details the two methods that can be used to account for import VAT:
Standard Import VAT Accounting
Unless you inform your agent otherwise, your import VAT will be accounted for under the normal rules. The payment will be made at the border or through a deferment account. Box 47E of your C88 customs declaration will show ‘F’ as the method of payment against the VAT liability.
There will be a time delay between paying the VAT and reclaiming it on the next VAT return which will impact cash flow.
HMRC will generate a C79 import VAT certificate to allow the import VAT to be recovered on the VAT return. Only once this has been received will you be able to recover the VAT.
PIVA Import VAT Accounting
The benefit of accounting using PIVA is that there is no liability to defer and no cash payment of Import VAT, which is much better for cashflow. If the goods you are importing are also nil duty, there will be no need for any payment to be made or routed through a deferment.
As importer of record, your business can account for and recover the VAT on your next return, which for fully taxable business will be akin to a net/nil accounting position. There is no need to be authorised for PIVA, however you will need to inform your customs agent that you intend to use postponed accounting.
Box 47E of your C88 customs declaration will need to show ‘G’ as the method of payment against the VAT liability. HMRC will generate a monthly online statement which acts as an equivalent to the C79 and will allow import VAT to be recovered on your next VAT return. Again, only once this has been received will you be able to recover the VAT.
The HMRC ‘Border Operating Model’ temporarily allows goods to be imported under simplified arrangements from Europe. Where such simplified procedures are being used at import, PIVA is mandatory.
PIVA Interaction with deferring
declarations
If traders wish to defer import declarations under the easements allowed, then postponed import VAT must be used, and the import VAT should be shown on the VAT return covering the period in which the import was cleared. As this import will not show on the monthly statement, an estimate of the import VAT may be required.
Once the declaration has been made, the import will show on the next monthly statement and any adjustment to the original import VAT declared on the VAT return may be adjusted on the following VAT return.
If an agent will be completing declarations on your behalf, you will need to ensure the agent includes your UK VAT registration number and EORI on the declarations to ensure they appear on your monthly statements.
For goods entered into a customs special procedure; such as a customs warehouse, inward processing, temporary admission, end use or outward processing, the import VAT will be included on the VAT return covering the period in which you submit the declaration releasing those goods into free circulation. The same applies for excise goods, i.e. once the goods are released for home consumption.
The following online process is correct at time of publishing this document.
PIVA - Step by Step
The step by step process for using CDS will be as follows:
Gain and confirm
access to Customs
Declaration Service
(CDS)
1
Inform your Customs
Agent that you wish to
use Postponed Import
VAT Accounting
2
Retrieve Monthly
PIVA Statements
from CDS
3
Complete your VAT
Return
A
Click ‘Start now’ Scroll down
Gain and confirm
access to Customs
Declaration Service
(CDS)
1
Follow the link:
https://www.gov.uk/guidance/get-your-postponed-import-vat-statement
B
Enter your Government Gateway Details:
C
User ID here Password here Click ‘Sign in’
Click the ‘get access to CDS’ link
D
E
Continued
Scroll down
F
Re-Enter your Government Gateway Details if prompted:
G
User ID here Password here Click ‘Sign in’
Enter your email address Click ‘Continue’
H
I
Continued Click ‘Yes’ Click ‘Continue’ Click ‘Continue’J
Click Continue
Click relevant business type
K
Click Continue Click relevant location
M
Continued
Click Continue
Enter name of your organisation
L
Click ‘Continue’ Enter EORI number
O
Click ‘Continue’ Enter address
N
Click ‘Continue’ Enter UTR if applicable
Q
Continued
Click ‘Continue’
Enter contact name here
Confirm
P
Click ‘Continue’
Enter date of establishment
Should be automatic Enter contact number here
R
S
Receive confirmation and save details:
T
If you already have access:
Continued
In order to use postponed import VAT accounting when the goods have been declared through the HMRC Customs Handling of Import and Export Freight system (CHIEF), you will need to ensure that the method of payment in BOX 47 of your import declaration shows a G. You will need to direct your freight forwarder or agent to declare this information correctly on your behalf.
Inform your Customs
Agent that you wish to
use Postponed Import VAT
Accounting
47 Calculation of taxes
Type Tax base Rate Amount MP
Retrieve Monthly
PIVA Statements
from CDS
3
Follow the link:
https://www.gov.uk/guidance/get-your-postponed-import-vat-statement
A
B
Enter your Government Gateway Details:
C
Click ‘Sign in’ User ID here Password here
D
Review the statement and save for your own records:
You will only be able to access a statement for 6 months from the date it is published, so you must download and keep a copy of each statement in your records.
A
Following importation of the goods into the UK, the import will show on the businesses’ online monthly statement and should be included on the next available VAT return as follows:
• Box 1 - Include the import VAT as shown on the monthly statement • Box 4 - Include the import VAT recoverable on the import (subject to normal VAT recovery rules) • Box 7 - Include the total value of the imported goods as shown on the monthly statement
Your accounting software provider may have new tools that can automate adjustments and ensure the correct boxes are filled.
