When goods are purchased from a country outside the UK, import VAT may be applied. This usually occurs when the goods supplied are vatable in the buyer's country. Normally a separate invoice is supplied from the courier showing the amount of import duty and VAT due. If your company is registered for VAT you can normally reclaim the import VAT, this is the VAT element of the invoice from HMRC.

CAUTION: If you are NOT using Postponed VAT please follow this guide

This article is supplementary to the VAT Notice 702 Imports, and deals with claiming the import VAT on goods only. If services have been supplied, or if you need to clarify whether import VAT should be reclaimed or not, you should contact your local VAT office.

New rules will come into force following the end of the Brexit transition date on 31/12/20, some of these are described briefly below but further details can be found here

Postponed VAT Accounting is an optional decision which can help with cashflow, however it is mandatory if you are deferring the submission of customs declarations.

New VAT code 18 (by default) has been created in Sage 200 2020 R2, for further information click here. This code will need to be manually created in older versions for further information click here.

Purchase invoices posted using this VAT code will apply notional VAT and effect boxes 7 (Net), 1 & 4 (VAT).

If you have opted into Postponed VAT Accounting with the HMRC, the new VAT code should be applied to the goods on the purchase invoice from your supplier. This will apply notional VAT which simulates both the VAT that would have been paid at customs (via your shipping agent or courier if Postponed VAT Accounting was not in effect) and later VAT reclaim.

Low Value Import Scheme

Imports into Great Britain from outside the UK not exceeding £135 in value will be subject to new VAT rules, Further information in the Low Value Import Scheme can be found here

Above Low Value Import Scheme

Use Postponed VAT Accounting mentioned above.

Below Low Value Import Scheme

As outlined in the article referred above on the Low Value Import Scheme, a new VAT code will need to be manually created. 

Purchase invoices posted using this VAT code will apply notional VAT and effect boxes 7 (Net), 1 & 4 (VAT).

If you are processing under the Low Value Import Scheme, the new VAT code should be applied to the goods on the purchase invoice from your supplier. This will apply notional VAT which simulates both the VAT that would have been paid at customs (via your shipping agent or courier if the Low Value Import Scheme was not in effect) and later VAT reclaim.