| | Record transactions using Postponed accounting |
| Description | How to record transactions using Postponed accounting for England, Scotland, Wales and Northern Ireland businesses. |
| Resolution | Record transactions using postponed accounting The way you record your import VAT usually depends on when you receive your documents. -
Estimate the VAT when you receive your supplier's invoice. This is likely to be the most common scenario. Use this method if there's likely to be a long gap between receiving the goods invoice and the monthly C79 statement -
Don't estimate the VAT on your supplier invoice and record the import VAT when you get your monthly C79 statement from HMRC. Consider this method if you receive your monthly statement and supplier invoice in the same period -
Declare the postponed VAT when you receive the invoice from your Import agent. Consider this method when your import agent provides an accurate postponed VAT value for you ▼Estimate the VAT on your supplier's invoice and correct it when you get your statement This is where you estimate the amount of Import VAT and declare it when you record the invoice from your supplier. Import VAT usually applies at the same rate as a domestic purchase. When you receive your monthly statement from HMRC (C79 certificate), check the VAT on the statement matches the VAT declared on the invoice. Record any differences as a journal to adjust the VAT Return. EXAMPLE: You buy goods worth £20,000 from Germany. You estimate £4,000 import VAT and include it on the invoice. The C79 shows £3,998, so adjust the difference in your next VAT Return. 
Enter the supplier invoice - Select your supplier.
- Enter the details of the goods purchased as normal.
- The VAT rate automatically is set to Zero Rated. Change the VAT Rate to Standard or Lower Rate as required.
- Once entered all the information, select Save.
This automatically applies postponed VAT on your invoice. Although VAT isn't shown on the invoice, we estimate it and record it in Box 1 (sales) and Box four (purchases) on the VAT Return. Adjust the VAT when you receive your monthly statement (C79 certificate). Once you receive your monthly statement from HMRC, check that the VAT estimated on the invoice matches the import VAT due on the statement. Use the Overseas Purchase of Goods report to help you reconcile your VAT Return, and make VAT adjustments where required. This now includes both EU and ROW sales and shows which invoices have estimated VAT. If there’s a difference between the estimated VAT and the VAT on your monthly statement, record an adjustment using a journal. We estimated the VAT at £4000 but the monthly statement is showing £3998 so we need to enter a VAT adjustment journal. - From Journals, select New Journal.
- Enter the details.
-
Add the amount of the adjustment on two lines, one each for VAT on sales and VAT on purchases. -
To reduce the VAT, record VAT on sales as a Debit and VAT on purchases as a Credit -
To increase VAT, record VAT on sales as a Credit and VAT on purchases as a Debit -
Make sure you select the Include On VAT Return checkbox ▼Record the import VAT when you get your monthly statement (C79 certificate) This is where you don't estimate the Import VAT. Wait to record the import VAT until you get your monthly statement. Use the Overseas Purchase of Goods report to help you reconcile your monthly statement, and make VAT adjustments where required. This now includes both EU and ROW transactions. EXAMPLE: You buy goods worth £20,000 from Germany. You estimate £4,000 import VAT and include it on the invoice. The C79 shows £3,998, so adjust the difference in your next VAT Return. Enter the supplier invoice - Select your supplier.
- Enter the details of the goods purchased as normal.
- The VAT rate is automatically set to Zero Rated. Your VAT Return doesn't include the VAT on this.
Record the VAT when you receive your monthly statement We estimated the VAT at £4000 but the monthly statement is showing £3998 so we need to enter a VAT adjustment journal. - From Journals, select New Journal.
- Enter the details.
- Add amount of the import VAT on two lines, one for VAT on Sales and one for VAT on purchases.
- Make sure you select the Include On VAT Return checkbox.
| Ledger Account | Incl in VAT Return | Debit | Credit | | 2200 VAT on Sales | Yes | | 3998 | | 2201 VAT on Purchases | Yes | 3998 | | ▼Declare the VAT when you receive the invoice from your import agent This applies when you receive the invoice from your import agent and they provide an accurate postponed VAT value. Record an invoice from your import agent Make sure you’ve create a supplier contact for your import agent and selected the Is Import agent checkbox. These could be an import agent, freight forwarder or Customs and Excise. - Select your import agent.
- Select Use postponed accounting to deal with import VAT.
- Record the details from the importer invoice.
- On a separate line, enter a VAT only line for the import VAT, using the relevant VAT rate.
We record the VAT, then deduct it automatically from the same invoice. 
NOTE: When you receive the import agent's invoice, record the purchase invoice with zero VAT so duty links to the agent, not the goods. Switch postponed accounting on by default If you always declare the import VAT on the import agent invoice, to help to prevent errors, choose to have the Use postponed accounting checkbox automatically selected (you can amend this on an invoice by invoice basis). - From Settings, within the Financial Settings area, select Accounting Dates & VAT.
- Scroll down and select the Use Postponed Accounting checkbox.
- Select Save.
We record VAT in Box one and Box four on the VAT return, so the entries cancel each other out. If you have selected Standard or Lower Rate, the VAT records in: The net amount recorded in: 
▼Flat rate VAT and postponed accounting If you use the flat rate scheme, imports under postponed VAT accounting sit outside the turnover used to calculate VAT due. We record the VAT on your VAT return in: We record the net amount in: |
|