19 October 2020

Import VAT under the new Border Operating Model

Formulated by George

We published two posts recently about the document the UK Government has released outlining the new procedures that will be in effect for cross border trade between. Here we explore some of the more detailed aspects regarding import VAT that will help you prepare for the changes. We want to point you to some of the resources that will help you prepare your business.

Firstly, review the links in the previous two posts if you haven’t already done so. There is a lot to take in and potentially lots to prepare. Here is a link to the first post covering the main Border Operating Model document and related resources and the second post focused on cross border trade (customs declarations and tariffs), the link is here.

  • Some things are now fixed and will apply from 1st January 2021 (the Customs Declaration situation, the Import VAT rules) so you can start preparing for those changes
  • Some things are still being negotiated (the UK-EU trade deal) so you need to review how WTO rules and tariffs could affect your business and if you trade across the Irish border there is also more to come on that
  • If you haven’t already, we strongly suggest you start planning for these changes

Postponed VAT accounting

The main VAT change is going to be that from 1st January 2021 some businesses can account for import VAT on their VAT Return, this is known as postponed VAT accounting.

An online monthly statement will be available to download which will state the total import VAT postponed for the previous month, which needs to be included in the VAT return for the period that you imported the goods in.

The VAT Return will change (Boxes 1, 4 and 7) and there will be a need for some changes in your Vat Posting Setup in NAV or Business Central system to account for the changes, these links explain more:

Import VAT when making Deferred Declarations

Our previous blog post gave links to the options available when importing, one of those can be to defer the import declaration by up to 6 months. This only defers the customs duties, not the import VAT. This will still need to be accounted for in your vat return BUT you will need to estimate the amount of import VAT from your own records.

Low-value consignments (below £135)

Watch out specifically for the ‘quirk’ that if the shipment is a low-value consignment, where the value is below £135 then the point of taxation is moved from the point of importation to the point of sale. This reads at first as if it only applies for B2C sales and only if via Online Market Places, but this is not the case, it can apply equally to a B2B transaction.

Read this carefully to check if it may apply to your transactions, you will need to ensure your system has appropriate setup to allow this posting and that your staff are aware that this may happen.

We are running a sequence of webinars to go through this and much more in detail, so get in touch with your Account Manager. We will continue to support our customers through this process, further updates will follow this post.

Further actions

If you need help with this transition, we have a webinar that we run on regularly, covering everything you need to know and changes that could affect you. If you want to know more, get in touch.


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