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To pay the import VAT at the point and time of entry through Customs – in which case an import VAT certificate C79 will be issued by HMRC to support a future reclaim of VAT by the entity. To use a Customs Agent who will pay the VAT and recharge by way of invoice to the entity (C79 also issued by HMRC). To elect to use Postponed VAT Accounting (PVA) whereby no import VAT is paid but entries are made on the next VAT return. To charge the import VAT to a deferment account (linked to bank account), where import VAT for the month can be charged for settlement by one monthly payment.
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How the individual or entity will make Customs declarations and the appropriate software. The rise of e-commerce and internet sales has seen the development of software that will provide a customs declaration service, but this can be quite a maze to navigate.
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As the Customs Declaration Service, (CDS) has replaced CHIEF, declarations via the CDS will be required. However, there will be other considerations.
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Tax and Duties on Imports
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When an entity acts as Importer of Record, a “Customs pack” of documents will be created, either by the entity or their Customs agent. These will need to be retained for a minimum of the 6 previous years (10 if using IOSS). The Customs Declaration Service (CDS) will hold details of the import and export declarations made using the entity’s EORI number. Each month the Postponed VAT Accounting (PVA) Statements and C79 certificates should be available for download, to check and keep with the Customs packs to support the entries made in the accounting records and VAT returns. Historic reports of import and export data can also be purchased from the CDS to ensure the completeness of records. This is the same information used by Inspectors of Taxes conducting compliance visits so the taxpayer can ensure their records are complete and correct.
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Obtaining PVA statements and declaring on VAT returns
Where an entity has elected to use the PVA, monthly statements should be downloaded from the CDS portal, and checked to the Customs document packs for individual imports before declaring on the next VAT. As no import VAT has been paid under PVA the entries on the VAT return both declare and reclaim the same amount of import VAT (so long as the import of goods is for business purposes and not for exempt sales), this is just a declaration exercise and no import VAT is payable.
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Reclaiming import VAT paid
Where an entity has paid over import VAT, either at the point of entry, to a Customs Agent or via a Deferment Account a repayment can be claimed so long as the entity has a C79 certificate which confirms that the import has been declared and import VAT paid. A common mistake is to reclaim import VAT charged on a Customs Agent invoice, however the VAT claim should be supported by C79 certificates. It is important to note that under CHIEF C79 documents were posted out to importers but now they are published to the CDS online to be downloaded. Scrutton Bland has a dedicated tax advisory team who support and advise clients on importing and exporting issues. This has risen in relevance since the change of rules with Brexit, and the increase in Internet and e-commerce sales. They can provide advice and assistance in recovering import VAT, and structuring business models with regards to importing and exporting in a tax efficient manner. Coupled with our SB Digital team we are well placed to support our clients in the modern trading environment. To get in touch, please call 0330 058 6559 or email hello@scruttonbland.co.uk
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When goods are imported, and duty is payable the entity has a number of choices:
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To pay the duties at the point and time of entry through Customs which may not be practical.
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To use a Customs Agent who will pay the duties and recharge by way of duty invoice.
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To set up a deferment account (linked to bank account), where duty charges for the month can be charged for settlement by one monthly payment.
Duty forms part of the cost of goods and cannot be reclaimed where correctly charged.
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When goods are imported, import VAT is also payable and again the entity will have a number of choices:
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