Imports into Great Britain from outside the UK, or Northern Ireland from outside the EU, require import VAT and customs duty. Import VAT usually follows the VAT treatment that applies to the goods domestically. You can account for import VAT in one of two ways: - Use postponed accounting and declare the import VAT on your VAT Return
- Pay import VAT when the goods arrive in the UK, usually through an import agent
Postponed accounting Postponed VAT accounting allows you to account for import VAT on your VAT Return instead of paying it when the goods enter the UK. Sage Accounting automatically records the VAT and reports it on the same VAT Return. VAT reverse charge accounts for the VAT due and reclaimable VAT. ▼ Practical example of postponed accounting | 1 June | You buy goods worth £10,000 from a supplier in Germany. | | 5 June | When the goods arrive in the UK, postponed accounting applies. HMRC doesn't collect import VAT at the border. | | 30 June | HMRC makes your postponed VAT statement available. | | VAT Return | - Declare the import VAT on your VAT Return
- Reclaim the same VAT on the same VAT Return (if recoverable)
| | Result | There’s no separate import VAT payment, which helps with cash flow. |
Pay import VAT when the goods arrive If you don't use postponed accounting, import VAT becomes payable when the goods enter the UK. Your courier, freight forwarder or import agent may pay the VAT and duty on your behalf and then invoice you for the amounts due. ▼ Practical example of paying VAT when the goods arrive | 1 June | You buy goods worth £10,000 from a supplier in Germany. | | 5 June | The goods arrive in the UK. | | 5 June | Your courier or customs agent calculates: - Import VAT: £2,000
- Duty: £100
Before releasing the goods, they either: - Collect the £2,100 from you, or
- Pay it on your behalf and invoice you later
| | 15 June | You receive an invoice from the courier for: - £2,000 import VAT
- £100 duty
- Any handling fees
| | VAT Return | Reclaim the £2,000 import VAT through your VAT Return (if reclaimable). | | Results | You pay the VAT upfront and recover it later, which can affect cash flow. |
Read record an invoice from an import agent for more guidance.
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