February 2021 / United Kingdom

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.

On 2 February 2021, HM Revenue & Customs (HMRC) updated its guidance on the EU exit transitional provisions for value added tax (VAT). This guidance concerns the VAT treatment of transactions that span the end of the transitional period and gives a broad overview of the changes to the VAT treatment of the following items:

• goods;
• fulfilment houses;
• services;
• call-off stock; and
• financial services.

There is a comment on the Tour Operators Margin Scheme, in particular three paragraphs that, according to the guidance, have force of law concerning the time of supply for VAT accounting.

The information on goods in a warehousing regime has, also, been updated.

On 23 February 2021, HM Revenue & Customs (HMRC) updated its guidance with information about the opening of the new payment scheme for value added tax (VAT) deferred between 20 March 2020 and 30 June 2020. The scheme is open from 23 February 2021 to 21 June 2021. The scheme allows payment of the deferred VAT to be made in equal interest-free instalments. A link to join the scheme is provided within the guidance, which needs to be read before applying to join the scheme.

Applications to use the scheme can only be made by the relevant business.

Businesses using either the VAT Annual Accounting Scheme or the VAT Payment on Account Scheme will be invited to join the new payment scheme in March 2021.