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

HMRC has confirmed that in the event of a no-deal Brexit, from 11pm 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 non-EU and EU countries and will help reduce any cash flow impact on businesses that are moving goods into the UK from other EU countries after the UK leaves the EU.

Businesses or individuals who are not VAT registered in the UK will need to pay import VAT up front at the time of import.

Any goods that are already in transit from the EU at 11pm on 29 March will continue to be treated as acquisitions and VAT accounted for on the return for the time in which the acquisition occurs.

For importers who bring goods into the UK under customs freight simplified procedures (CFSP) will need to complete a simplified frontier declaration before 11pm on 29 March 2019. This will allow businesses to account for import VAT on their VAT return.

Import VAT needs to be accounted for through software or directly through the CHIEF system to declare customs duties. Information that will be required includes:

• 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 that use the new Customs Declaration Service (CDS) to declare customs duties must enter their VAT registration number at header level in data element 3/40.

HMRC has said 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.

HMRC stresses that businesses must authorise their accountants and tax advisers to use postponed accounting for import VAT on the trader’s behalf.

From 29 March 2019, all businesses importing goods into the UK will also need a UK Economic Operator Registration and Identification (EORI) number. https://www.gov.uk/eori

HMRC is writing to all VAT-registered businesses trading with the rest of the world, or the EU and the rest of the world explaining how 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

Read the full letter here: HMRC Letter to VAT registered businesses trading with EU and worldwide – urgent action required