February 16 2021

United Kingdom Guides Businesses on Accounting for Import VAT

Source: IBFD Tax Research Platform News

On 11 February 2021, HM Revenue & Customs (HMRC) published two updated papers providing businesses with guidelines on how to account for import VAT on a UK VAT return. The papers concern the following circumstances:

  • when import VAT can be accounted for on a VAT return, which can be found here; and
  • how a VAT return to account for import VAT can be completed, which can be found here.

The first paper has been updated to provide greater clarity on what needs to be done and how to do it, and the second paper has been updated and the following sections have been added:

  • if you use a VAT accounting scheme; and
  • transactions or movements of goods which span the end of the transition period.

The section on VAT accounting schemes explains what needs to be done if a business is using the flat-rate scheme for small businesses. Also, it makes clear that the cash accounting Scheme cannot be used for goods imported or removed from a customs warehouse. Finally, the section on items spanning the end of the transition period highlights the need to check how to account for the VAT.