Brexit – 1 January 2021 Changes to Import VAT on goods, including from the EU

Earlier this month It was confirmed that there will be no extension to the Brexit transitional period which is due to end on 31 December 2020. With six months or so to go before essentially we leave behind EU VAT rules and new import controls begin for all goods entering the UK, the UK Government has announced some transitional changes around the import of goods from the EU from 1 January.

Postponed accounting for UK imports

The precise details around how values for import VAT will be picked up and reported on VAT returns have not yet been advised by HMRC but we already know that with effect from 1 January next year Postponed Accounting for VAT will be introduced for both non-EU and EU imports to the UK. This will provide a welcome cash flow benefit to UK importers who will self-account for import VAT on their VAT returns instead of paying VAT as goods arrive into the UK, either on entry to UK port or a month later via their import Deferment accounts.

Imports from the EU

One of the announcements on 12 June relates to the import of “standard” goods from the EU to the UK for a transitional 6 month period from 1 January to 30 June 2021, giving UK importers a choice between making:

• Full (detailed) Customs declarations at entry of goods to the UK (as they will continue to do for non- EU imports) and using Postponed Accounting for VAT and paying over any Duty to HMRC at import; or   
• Basic Customs declarations at entry of goods to the UK and following those up with full Customs declarations together with payment of related VAT and duty by 30 June.

This temporary choice will be in place for 6 months and when it ends on 30 June, all imports regardless of where goods come from will be subject to Postponed Accounting for VAT on VAT returns and the settlement of any Duty at the time of import, including using a Deferment account if one is in place.

Certainly, there will need to be some practical detail around these changes in the next few months and if you are signed up to receive information from Centurion you will of course receive updates from us as they arise. In the meantime, you may wish to review any deferment account and bank guarantee arrangements that you have or may need going forward and we would be happy to assist. Please get in touch with andrea.brindley@centurionvat.com or emailus@centurionvat.com for help in this area.

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