If you are involved with imports, you may have heard the term Postponed VAT Accounting. If you want to know more about it, what it is and when it may be of benefit to your business, please read on.
What is Postponed VAT Accounting?
If your business is VAT registered in the UK and you imports goods from outside the UK in consignments of more than £135 value, then you may want to consider whether you should account for the VAT on your VAT return rather than at the point of import. You are able to use this scheme if the goods you are importing are for use in your business, and you have included your VAT registration number on your customs declaration. You can’t use this scheme if the goods are for solely non-business use.
What is the potential benefit?
By using the scheme, your business should receive a cash flow benefit from not having to pay the VAT over at the time of import and reclaim on the usual VAT return potentially 3 or 4 months down the line – for higher value importers, this benefit could be significant, and if you are using a freight forwarder, you should advise them of how you wish to account for the VAT before the import takes place
It should be noted that this is only a brief overview of the scheme, and there are different scenarios where you must account for the VAT on your VAT return, such as goods in special procedures. If you want to know more, please contact us.
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