UK Customs Issues Guidance on New VAT Payment Scheme to Take Effect if No-Deal Brexit
Importers into the United Kingdom will be able to pay VAT on periodic returns rather than at the time of entry if the U.K. leaves the European Union with no deal in place on March 29, HM Revenue and Customs said in a guidance document issued March 6. “This will apply to goods from both EU and non-EU countries and will help businesses currently moving goods into the UK from other EU member states to reduce any cash flow impacts after the UK leave the EU,” the guidance said.
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Registration will be required to take advantage of the new scheme, HMRC said. “Businesses or individuals who are not VAT registered in the UK will not be able to account for import VAT in this way. They’ll need to pay import VAT up front at the time of import.” The goods must be for use by the importer’s own business to take advantage, HMRC said.
To account for import VAT on periodic returns, the importer’s VAT registration number or U.K. Economic Operator Registration and Identification (EORI) number must be entered on the import declaration or in the Customs Handling of Import and Export Freight (CHIEF) system. In CHIEF, VAT “will be recorded against your EORI and will be at declaration level only,” HMRC said.
A monthly statement will then be generated online that should be downloaded and kept in the importer’s records. “It will indicate the total import VAT postponed for the previous month and when to include it in your VAT return,” HMRC said. The first monthly statement, covering March 29 through March 31, will be sent with the April statement. “If your import VAT statement is not available when you have to submit your return covering March 2019, you can estimate the import VAT you want to declare and reclaim,” HMRC said.
Importers may also have an authorized agent account for import VAT. To make customs declarations on the importer’s behalf and account for import VAT on the importer’s VAT return, the agent should use the importer’s VAT registration number or EORI number. “Agents must not use their own VAT registration number,” HMRC said.
Goods already in transit from the EU as of 11 p.m. on March 29, when Brexit is formally slated to occur, “must continue to be treated as acquisitions and VAT accounted for on the return for the period in which the acquisition occurs,” HMRC said. Goods brought into the UK using customs freight simplified procedures (CFSP) for which the simplified frontier declaration was completed before 11 p.m. “will not be able to account for import VAT on your VAT return even if your supplementary declaration is completed after this time,” the guidance said.