| | Postponed accounting for Great Britain businesses |
| Description | If you import goods, you'll most likely pay import VAT and duty. This applies if the goods you buy are subject to VAT in the UK. Most imported goods use the standard VAT rate of 20%. |
| Resolution | What is Postponed accounting? Postponed accounting allows you to declare and recover import VAT in the same VAT Return. You can do this on a transaction by transaction basis. Meaning businesses don't have to pay import VAT for goods at the UK border or reclaim the VAT from HMRC. Businesses registered in England, Scotland and Wales can use postponed accounting for importing goods from the EU and the rest of the world.
Make sure you have an EORI number To import goods, you'll need an Economic Operators Registration and Identification number (EORI). Follow HMRC guidance to get an EORI number.
About Postponed accounting Is this right for your business?▼ Buying regularly from outside the UK can significantly improve your cashflow, as you don’t pay VAT on things you've not received yet. To use postponed accounting, select the option when recording your purchase invoice. We'll automatically apply the correct VAT and update the VAT Return for you. How it works▼ To understand the impact postponed accounting could have on your business, compare the same transaction posted with, and without postponed accounting. On 1 January, your business buys goods from the USA for purely business use. It costs £20,000. Without postponed accounting | Date | | Invoice amount | Amount paid | | 1 January | You receive an invoice from your supplier for the cost of the goods. The VAT is zero-rated, so the invoice is just for the net value. | £20,000 | £20,000 | | 3 January | Your goods arrive. You have to pay the duty and import VAT before the warehouse releases your goods. If you use an import agent, they’ll pay the duty and import VAT for you and then charge you and add their fees. You receive and pay the invoice from your import agent for £2,000 duty, £400 VAT and the £4,000 Import VAT due on the purchase. | £6,420 | £6,420 | | 9 April | You submit your VAT Return. The VAT on this transaction shows in box 4 of your VAT Return. You can now reclaim the total VAT paid. | | -£4,400 | Using postponed accounting | Date | | Invoice amount | Amount paid | | 1 January | You receive an invoice from your supplier for the cost of the goods. The VAT is zero-rated, so the invoice is just for the net value. As you're using postponed accounting, you estimate the VAT at 20%. The estimated VAT of £4,000 is recorded in boxes 1 and 4 on your next VAT Return and the net value impacts box 7. | £20,000 | £20,000 | | 3 January | Your goods arrive. As you’ve postponed the VAT, the import VAT isn’t paid. If you use an import agent, they’ll pay the duty and then charge you and add their fees. You receive and pay the invoice from your import agent for £2,000 duty and £400 VAT. | £2,400 | £2,400 | | 9 April | Submit your VAT Return. The estimated VAT shows in boxes 1 and 4 of your VAT Return. As these entries cancel each other off, no VAT is due. The purchase is recorded in box 7. | |
Record transactions using Postponed accounting Follow our article to record transactions using Postponed accounting. |
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