Post import VAT and duty using Postponed VAT Accounting

Summary

How to record import VAT and duty in Sage 50 Accounts when using Postponed VAT Accounting

Description

 NOTE: This article supports VAT Notice 702 Imports and explains how to claim the import VAT on goods only. If you've received services or aren't sure whether you can reclaim import VAT, contact your local VAT office.

When you purchase goods from a country outside the UK, the purchase can include import VAT. You’ll receive a separate invoice showing the import VAT and duty paid at customs on your behalf. If your company is registered for VAT, you can usually reclaim the import VAT with supporting C79 certificates from HMRC.

Since 1 January 2021, the UK now uses Postponed VAT Accounting. You report import VAT on your VAT Return instead of paying it at the border. If you use this method, the import VAT won’t appear on the import agent’s invoice—it’s on a monthly HMRC statement instead.

If you don't use Postponed Accounting, follow our alternative article to Post import VAT and duty on goods without Postponed Accounting.

NOTE: If you're based in Northern Ireland, this will only apply to goods imported from outside the EU.

Resolution

We'll use the following example:

  • You receive a purchase invoice from Germany
  • The value of the invoice from the supplier is €1,100
  • The exchange rate is 1.1
  • There's an import VAT invoice from the import agent for £200

Using Postponed VAT Accounting, import VAT won’t appear on the agent’s invoice. Instead, HMRC confirms the amount on a monthly statement.

  • There's an invoice for duty from the import agent for £100 plus £20 VAT

Create a supplier record for the import agent

You need to create a new supplier record to record the invoice for the import duty and VAT.
  1. Click Suppliers then click New.
  2. Complete the supplier record as follows:
    A/C* Enter the account reference for the import agent account, for example, IMPORTS.
    Name Enter the account name, for example, Import Company.

    Complete any other information as required.

  3. Click Save then click Close.

Choose how to post postponed VAT

When using Postponed VAT Accounting, you can post a supplier invoice to include the postponed VAT. However, the postponed VAT amount is only an estimate until you receive your monthly statement from HMRC. If there's a discrepancy, post an adjustment to account for this.

There are two ways you can account for postponed VAT in Sage 50 Accounts v27.1 and above:

Option 1 Post one invoice that includes both the goods and the Postponed VAT. Then when you receive the monthly statement from HMRC, if the Postponed VAT is different, post an adjustment.
Option 2 Post an invoice for the goods, not including the Postponed VAT. Then when you receive the monthly statement from HMRC, post a separate VAT only invoice for the Postponed VAT.
▼ Option 1 - Post an invoice for the purchase of goods and import VAT
  1. Click Suppliers then click Batch invoice.
  2. Enter the product amount in the Net column and the Import VAT amount in the VAT column. For example:

    If you use Foreign Trader, create the supplier's account in Dollars and enter the invoice in Dollars. For example, enter an exchange rate of 1.1 then enter the following:
    A/C* Date* N/C* Details Net T/C* VAT
    Supplier Date Nominal code Details 1,100.00 T18

    220.00

     

    If you aren't using the Foreign Trader option, enter the supplier invoice as its equivalent Sterling value. For example:

    A/C* Date* N/C* Details Net T/C* VAT
    Supplier Date Nominal code Details 1,000.00 T18 200.00
    NOTE: T18 is the default postponed VAT code. This can differ depending on your existing tax codes. The software creates a VAT-only credit note for the same amount when you post the T18 VAT-only invoice. Find out more in our Automatic postings of postponed accounting article.

  3. Click Save then click Close.

Post an invoice for the import duty

  1. Click Suppliers then click Batch invoice.
  2. To record the supplier invoice for import duty, enter the relevant details in the boxes provided. For example:
    A/C*
    Date*
    N/C*
    Details
    Net
    T/C*
    VAT
    IMPORTS Date 5101 Import duty 100.00 T1 20.00
    Import duty usually has the same VAT rate as the item. If unsure, contact your local VAT office.

  3. Click Save then click Close.

Post an adjustment if the Postponed VAT amount is different

NOTE: For these examples, the difference is €11/£10 at the same exchange rate of 1.1.

If HMRC statement amount is more

  1. Click Suppliers then click Batch invoice.
  2. To record the adjustment, leave the Net amount as zero and enter the difference in the VAT column. For example:

    If you use Foreign Trader, create the supplier's account in Dollars and enter the invoice in Dollars. For example, enter an exchange rate of 1.1 then enter the following:
    A/C* Date* N/C* Details Net T/C* VAT
    Supplier Date Nominal code Details 0.00 T18

    11.00

     

    If you aren't using the Foreign Trader option, enter the supplier invoice as its equivalent Sterling value. For example:

    A/C* Date* N/C* Details Net T/C* VAT
    Supplier Date Nominal code Details 0.00 T18 10.00
    NOTE: T18 is the default postponed VAT code. This can differ depending on your existing tax codes. The software creates a VAT-only credit note for the same amount when you post the T18 VAT-only invoice. Find out more in our Automatic postings of postponed accounting article

  3. Click Save then click Close.

If the HMRC statement amount is less

  1. Click Suppliers then click Batch credit.
  2. To record the adjustment, leave the Net amount as zero and enter the difference in the VAT column. For example:

    If you use Foreign Trader, create the supplier's account in Dollars and enter the invoice in Dollars. For example, enter an exchange rate of 1.1 then enter the following:
    A/C* Date* N/C* Details Net T/C* VAT
    Supplier Date Nominal code Details 0.00 T18

    11.00

     

    If you aren't using the Foreign Trader option, enter the supplier invoice as its equivalent Sterling value. For example:

    A/C* Date* N/C* Details Net T/C* VAT
    Supplier Date Nominal code Details 0.00 T18 10.00
    NOTE: By default, T18 is the postponed VAT code, but can differ depending on your existing tax codes. 

  3. Click Save then click Close.

 

▼ Option 2 - Post an invoice for the purchase of goods

 

  1. Click Suppliers then click Batch invoice.
  2. Enter the product amount in the Net column and leave the VAT amount as zero. For example:

    If you use Foreign Trader, create the supplier's account in Dollars and enter the invoice in Dollars. For example, enter an exchange rate of 1.1 then enter the following:
    A/C* Date* N/C* Details Net T/C* VAT
    Supplier Date Nominal code Details 1,100.00 T18

    0.00

    If you aren't using the Foreign Trader option, enter the supplier invoice as its equivalent Sterling value. For example:

    A/C* Date* N/C* Details Net T/C* VAT
    Supplier Date Nominal code Details 1,000.00 T18 0.00
    NOTE: By default, T18 is the postponed VAT code, but can differ depending on your existing tax codes. 

  3. Click Save then click Close.

Post an invoice for the import VAT only to the IMPORTS supplier code.

  1. Click Suppliers then click Batch invoice.
  2. Enter the product amount in the Net column and the Import VAT amount in the VAT column. For example:

    If you use Foreign Trader, create the supplier's account in Dollars and enter the invoice in Dollars. For example, enter an exchange rate of 1.1 then enter the following:
    A/C* Date* N/C* Details Net T/C* VAT
    IMPORTS Date Nominal code Details 0.00 T18

    220.00

     

    If you aren't using the Foreign Trader option, enter the supplier invoice as its equivalent Sterling value. For example:

    A/C* Date* N/C* Details Net T/C* VAT
    IMPORTS Date Nominal code Details 0.00 T18 200.00
    NOTE: By default, T18 is the postponed VAT code, but can differ depending on your existing tax codes. 
  3. Click Save then click Close.

Post an invoice for the import duty to the IMPORTS supplier code.

  1. Click Suppliers then click Batch invoice.
  2. To record the supplier invoice for import duty, enter the relevant details in the boxes provided. For example:
    A/C*
    Date*
    N/C*
    Details
    Net
    T/C*
    VAT
    IMPORTS Date 5101 Import duty 100.00 T1 20.00
    Import duty usually has the same VAT rate as the item. If unsure, contact your local VAT office.

  3. Click Save then click Close.

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.

Leave your details

Image

Solution Properties

Solution ID
210128171054330
Last Modified Date
Mon Oct 20 10:58:13 UTC 2025
Attributes
Product Details
Modules: Tax
Modules: VAT
Views
0