07 January 2021

A potential cashflow benefit from Brexit for Dynamics 365 Business Central users

Formulated by George

At the moment businesses are dealing with a lot, finding our way with the Brexit changes whilst coping with the challenges that Covid-19 continues to present. There may however be a beneficial aspect for your cashflow of the Brexit changes that your business may not have picked up on.

Customs processes and the new procedures around Import VAT may not sound exciting, but there is an option you could be missing out on that will help your cash flow. If you were already importing from outside the EU, then you may have a deferment account and have your Import VAT charged to you one month later which you then reclaim on the next VAT Return. You now have the option of not doing this, not handing over any payment at all, simply by using the postponed VAT accounting procedures which have been brought in to assist UK companies. The fact that they were brought in as part of the Brexit changes may mean you were not aware that they can also apply to imports from the rest of the world.

Your freight forwarder may be handling this on your behalf, or you may be doing it yourself via CHIEFS or CDS. Either way, you can choose to use the postponed VAT accounting route to ‘pay’ the import VAT that is due. This simply means you will be able to get a statement each month from HMRC giving the amount of Import VAT that you need to account for in your VAT Return, as you can also reclaim this via the same VAT Return there is no actual outlay of cash by your business.

This link explains how it works: https://www.gov.uk/guidance/check-when-you-can-account-for-import-vat-on-your-vat-return

The use of this process is optional, you need to specifically state on your customs declaration that you wish to use this route if you use a freight forwarder you will probably need to tell them that you wish to swap to using this option. We have already spoken to a number of customers that were not aware of this potential benefit.

Completing the customs declaration

When you complete your customs declaration, you can select that you will be accounting for import VAT on your VAT Return:

  • If you use the Customs Handling of Import and Export Freight (CHIEF) system, on your customs declaration, you need to enter your GB EORI number into box 8 (Header Consignee), or, if applicable, your VAT registration number in box 44h (Registered Consignee) and then ‘G’ as the method of payment in Box 47e
  • If you use the Customs Declaration Service, you need to enter your VAT registration number at header level in data element 3/40. VAT will be recorded against your EORI and will be at declaration level only.
  • Your freight forwarder can do this on your behalf but you may need to check with them and specifically instruct this change

How do I get the monthly statement?

The government updated one of their previously released advice pages on December https://www.gov.uk/guidance/complete-your-vat-return-to-account-for-import-vat.

This guidance suggests that the new monthly statement (required for you to be able to complete your VAT Return) will be available to view in the first half of the following month and will only be available to download for 6 months from the date it was published.

They suggest you use this link https://www.gov.uk/guidance/get-your-postponed-import-vat-statement to sign up to get your postponed import VAT statement, you will need your Government Gateway user ID that is linked to your EORI number. You will have to register with CDS (Customs Declaration Service) but this is pretty straightforward, once you have registered if you follow the above link it will take you to your Postponed import VAT statements.


Want to know more?

When using this route, you will need some simple set up in your Microsoft Dynamics NAV or Dynamics 365 Business Central to allow you to post a journal that will be picked up in the appropriate boxes (1 and 4) on your VAT Return. Contact your Tecman Account Manager to arrange assistance or check the advice on our Brexit portal.

Enhanced on 20 Jan 2021

Reply to George's post

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