HMRC Brief 2 (2019): VAT – import VAT deducted as input tax by non-owners
Released 11 April 2019
HMRC Brief 2 (2019) explains correct treatment for deduction of import VAT by a taxable person who is not the owner of the relevant goods.
HMRC is aware of incorrect treatment by businesses whereby import VAT has been incorrectly deducted as input tax by non-owners of the goods in two situations:
Toll operators - HMRC has become aware that UK toll operators who have paid import VAT on behalf of overseas customers have also claimed a corresponding deduction for input tax under VATA 1994, s. 24. However, there is no provision in UK law for such deduction. The correct procedure is for the owner to be the ‘importer of record’ and reclaim the import VAT, either in accordance with VATA 1994, s. 24 (if registered for VAT in the UK) or under the Thirteenth VAT Directive (86/560/EEC).
Where title has passed before import into the UK - In some situations, businesses sell on the goods just before importing them into the UK so ownership and title has passed to the new owner, however the business that sold the goods acts as ‘importer of record’ on UK import declarations, pays the import VAT to HMRC and receives the import VAT certificate (C79). The correct procedure is for the new owner of the goods to be the ‘importer of record’ and reclaim the import VAT on the C79 and not the previous owner, in accordance with VATA 1994, s. 24.
From 15 July 2019, HMRC will only allow claims for input tax deduction made using the correct procedures.