Reclaiming import tax with the import VAT certificate, C79
Summary
Description
When purchasing goods from countries outside of the UK, if you receive a import VAT certificate, C79, you can claim your import tax back.
NOTE: From 1 January 2021, Postponed VAT Accounting has been introduced in both the UK and Republic of Ireland to improve business cash flow for imports. When using Postponed VAT Accounting, import VAT due on goods arriving in the UK or Ireland can be accounted for on a VAT Return rather than having to pay the VAT as soon as the goods arrive at the border. In this instance, instead of the C79 form, HMRC will issue a monthly statement detailing all of the import VAT that has been postponed in each month. The postings you make are the same.
Resolution
No VAT is charged on the invoice for the goods but you receive an extra invoice from the import company for the duty and VAT. You can't reclaim any import VAT paid until you receive the C79 form or monthly statement from HMRC.
If you've received the C79 form or monthly statement
We recommend to set up a new supplier account for the import company to post the import duty and VAT.
To record the purchase of the goods:
- Post a purchase invoice to the supplier's account for the value of the goods with a value in the Net column only using tax code T0. No VAT is calculated. NOTE: If you're using one of the Flat Rate schemes, this doesn't affect the VAT Return.
To record the import duty, post a purchase invoice to the import company using the duty nominal code:
- Post a purchase invoice entering the net amount in the Net column, the VAT charged on the duty in the VAT column and tax code T1.
To record the import VAT:
- Post a purchase invoice to the import company using the duty nominal code, 5101 by default, entering zero in the Net column and the import VAT in the VAT column - use a T1 tax code.
| A/C | Date | N/C | Details | Net | T/C | VAT |
|---|---|---|---|---|---|---|
| Supplier account reference | Date of the transaction | Nominal code for the purchase | Goods | Net element of the transaction | T0 | 0.00 |
| Supplier account reference for the import company | Date of the transaction | Nominal code for the duty (typically 5101) | Import duty | Net element of the duty | T1 | VAT element of the duty |
| Supplier account reference for the import company | Date of the transaction | Nominal code for the duty (typically 5101) | Import VAT | 0.00 | T1 | Import VAT element |
When you pay for the goods and pay the import VAT and duty, record this as supplier payments against the invoices.
If you haven't received the C79 form or monthly statement
We recommend to set up a new supplier account for the import company to post the import duty and VAT.
To record the purchase of the goods:
- Post a purchase invoice to the supplier's account for the value of the goods with a value in the Net column only using tax code T0. No VAT is calculated.
To record the import duty, post 2 separate invoices to the import company using the duty nominal code:
- Post a purchase invoice entering the net amount in the Net column, 0.00 in the VAT column and tax code T0. NOTE: If you're using one of the Flat Rate schemes, this doesn't affect the VAT Return.
- Post a purchase invoice entering 0.00 in the Net column, the VAT charged on the duty in the VAT column and tax code T9. NOTE: If you're using one of the Flat Rate schemes, these don't affect the VAT Return.
To record the import VAT:
- Post a purchase invoice to the import company using the duty nominal code entering zero in the Net column and the VAT in the VAT column - use a T9 tax code. You must mark the invoice as paid.
| A/C | Date | N/C | Details | Net | T/C | VAT |
|---|---|---|---|---|---|---|
| Supplier account reference | Date of the transaction | Nominal code for the purchase | Goods | Net element of the transaction | T0 | 0.00 |
| Supplier account reference for the import company | Date of the transaction | Nominal code for the duty (typically 5101) | Import duty | Net element of the duty | T0 | 0.00 |
| Supplier account reference for the import company | Date of the transaction | Nominal code for the duty (typically 5101) | Import duty VAT | 0.00 | T9 | VAT element of the duty |
| Supplier account reference for the import company | Date of the transaction | Nominal code for the duty (typically 5101) | Import VAT | 0.00 | T9 | Import VAT element |
When you pay for the goods and pay the import VAT and duty, record these as supplier payments against the invoices.
Once you receive form C79 or your monthly statement from HMRC, the VAT can be reclaimed. To record this, post the following journal:
| N/C | Details | T/C | Debit | Credit |
|---|---|---|---|---|
| 2201 | VAT Adjustment | T1 | Import VAT amount | 0.00 |
| 2201 | VAT Adjustment | T1 | VAT amount charged on import duty | 0.00 |
| 2201 | VAT Adjustment | T9 | 0.00 | Total import VAT amount including the VAT charged on the duty |
Upgrade your licence
Growing business? Add more companies, users, or employees to your licence with ease. Leave your details and we’ll be in touch.
Solution Properties
- Solution ID
- 200427112401769
- Last Modified Date
- Wed Mar 23 14:26:05 UTC 2022
- Attributes
-
Product DetailsModules: Customers
Modules: Suppliers
Modules: Contact Management
Modules: Tax
Modules: VAT
- Views
- 0