We return to the subject of trading in goods with the EU. This time we outline the arrangements for paying import VAT and duties. You can read Part One here.
As a UK VAT registered business, you will be able to account for import VAT on your VAT returns for both goods imported from the EU and anywhere else in the world. This will be done by declaring and recovering import VAT on the same VAT return (similar to the way you may have been accounting for VAT on acquisitions from the EU currently), without the need to pay the VAT at the time of import. This is commonly referred to as “postponed accounting” and offers a simplification and cash flow advantages compared to the current rules for imports from outside of the EU.
Postponed accounting can be used to account for import VAT if:
- the goods are imported for use in a business;
- the business’s EORI number, which starts GB, is included on the customs declaration;
- the business’s VAT registration number is shown on the customs declaration, where needed.
In terms of import duty payable, this will either have to be paid at the time you import the goods or can be deferred if you have a ‘deferment account’ with HMRC or you can use your import agent’s deferment account. A duty deferment account lets you make one payment a month through Direct Debit instead of paying for individual consignments. In applying for a deferment account you may need to provide a bank guarantee (although this is not needed in all cases).
Further details and how to apply can be found here.
The rates of import duty will be determined in line with a UK-specific tariff applicable with effect from 1st January 2021. You can check the tariff that will be applicable to your goods here.
In our next Brexit Newsletter, we will outline the arrangements for selling goods to businesses and consumers in the EU.