HMRC sets out rules for postponed VAT accounting if no deal Brexit

With weeks until Brexit, HMRC has finally issued guidance for importers and exporters on how a postponed VAT accounting system would work in the event of no deal scendario to prevent businesses having to immediately pay UK VAT on imports from the EU

At the same time HMRC has written to all VAT-registered exporters and importers advising them about how to prepare for a no deal Brexit.

In the letter from HMRC, flagged with the headline 'urgent action required', deputy chief executive, Jim Harra said: ‘We recognise the challenges that you face in getting to grips with new and unfamiliar requirements by 29 March 2019. We are committed to supporting you and your business through this period of change, helping you to comply and making importing and exporting with the EU in a no deal scenario as easy as possible.’

HMRC has confirmed that in the event the UK leaves the EU without a deal, from 11pm GMT on 29 March 2019, businesses registered for VAT in the UK will be able to account for import VAT on their VAT return rather than pay when, or soon after, the goods arrive at the UK border.

This will apply to goods from both EU and non-EU countries and will help businesses currently moving goods into the UK from other EU member states to reduce any cash flow impacts after the UK leave the EU.

Businesses or individuals who are not VAT registered in the UK will not be able to account for import VAT in this way. They’ll need to pay import VAT up front at the time of import.

Goods in transit

Any goods already in transit from the EU at 11pm GMT on 29 March 2019 must continue to be treated as acquisitions and VAT accounted for on the return for the period in which the acquisition occurs.

Any importers bringing goods into the UK under customs freight simplified procedures (CFSP) will have to complete a simplified frontier declaration before 11pm on 29 March 2019. This allows the business to account for import VAT on their VAT return even if a supplementary declaration is completed after this time.

Import VAT needs to be accounted for through software or directly via the CHIEF system to declare customs duties. The following information will be required:

input EORI number (which includes VAT registration number) into either registered consignee (SAD box 44h) or consignee (SAD box 8); and

enter ‘G’ as the method of payment.

For companies using the new Customs Declaration Service (CDS) to declare customs duties their VAT registration number will have to be entered at header level in data element 3/40.

HMRC has confirmed that monthly import VAT statements showing declarations made from 11pm on 29 March to 31 March 2019 will be available at the same time as April’s statement.

The letter from HMRC tells exporters and importers to talk to their tax agent about how a no deal Brexit would affect your business, and stresses that they must authorise their accountants and tax advisers to use postponed accounting for import VAT on the trader’s behalf

• find out from your software provider how the changes will affect your processes

From 29 March 2019, all businesses importing goods into the UK will also need a UK Economic Operator Registration and Identification (EORI) number.

Letter to VAT registered businesses in event of no deal

HMRC is writing to all VAT-registered businesses trading with the rest of the world, or the EU and the rest of the world. It explains actions to take to prepare for changes to customs and VAT procedures if there is no deal:

  • getting a UK Economic Operator Registration and Identification (EORI) number;
  • Transitional Simplified Procedures for customs;
  • customs facilitations;
  • moving goods within the EU using the Common Transit Convention;
  • further controls for exports;
  • changes to accounting for VAT;
  • VAT registration checks; and
  • EU VAT refunds.

HMRC Letter to VAT registered businesses trading with EU and worldwide – urgent action required released 6 March 2019

HMRC Guidance Accounting for import VAT issued 6 March 2019

Report by Sara White

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