Postponed VAT Accounting

Postponed VAT Accounting

Since 1 January 2021 VAT registered businesses can use a new system called postponed VAT accounting to account for VAT on the goods they import from outside the United Kingdom.

Postponed VAT accounting is simple to use and significantly aids cashflow for importing businesses, lessening the impact of Brexit and benefits those importing from outside the EU too.

This system lets you declare and recover import VAT on the same VAT return rather than having to pay it upfront and reclaim later, subject to normal rules relating to input VAT recovery.

If your business is registered for VAT in the UK, you will be able to account for import VAT on your VAT Return for goods you import into:

  • Great Britain (England, Scotland and Wales) from anywhere outside the UK
  • Northern Ireland from outside the UK and EU only*

*There has been no change to the VAT treatment and accounting in respect of the movement of goods between Northern Ireland and the EU.

No application or advance approval from HMRC is required to use the new system, however, the goods must be used in your business and your VAT number must be shown on your customs declarations.

The system is mandatory if you either defer submission or use simplified customs declarations. Otherwise, it is optional, and you can still pay the VAT upfront if you so wish. This will require you to obtain monthly certificates from HMRC as evidence of the VAT paid as previously.

There are also changes to the way you complete the boxes on your VAT return to account for the import VAT and the VAT recovery. This works similar to the reverse charge mechanism for VAT, so you will need to ensure that your software is set up correctly to cope with the change.

If you would like any further information or any assistance with accounting for the change please don’t hesitate to contact us.


Gillian Cookson

Tax Manager

direct dial: 01942 292546

mobile: 07484 271884