VAT - Import VAT

From 1 January 2021, if your business is registered for VAT in the UK, you will be able to account for import VAT on your VAT 100 return for goods that are imported into:

• England, Scotland and Wales from anywhere outside the UK
• Northern Ireland from outside the UK and EU

If the organisation buys goods from outside of the UK for use in the business then it may optionally use a system called postponed VAT that allows it to account for VAT on the VAT 100 return rather than paying VAT immediately at the point of entry. This is a potentially complex area and so we strongly advise you consult with your advisor.

Accounting for Import VAT

If the organisation chooses to use the postponed VAT option simply enter the bill or payment transaction ensuring that Import VAT is selected for the vat rate and complete the transaction normally.

The system impact is to add to the VAT control account an amount of output tax (as if a sale) calculated on the full value of the supply received (or in the case of software the value paid), at the same time add (subject to the normal rules for deduction of input tax) the same amount of VAT as input tax to the VAT control account. The vat excluded value of the purchase is also reported. The impact on VAT is zero; however it does affect the VAT100 return as the vat excluded value of the purchase must be reported.