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Five Brexit VAT myths debunked

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Over five months since the UK left the EU, Neil Warren dispels five ‘myths’ about the post-Brexit VAT world.

19th May 2021
Independent VAT Consultant
Columnist
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AccountingWEB's Brace for Brexit series has been at the forefront of ensuring readers are up to date with all the latest information about the new rules and regulations. But now businesses have been living with the rules since the start of the year, how good is your knowledge about the new VAT procedures?

In this article, we’ll tackle five VAT myths and rumours that have gathered momentum since the UK left the EU.   

Myth 1: Postponed VAT Accounting (PVA) is a temporary facility that will end on 30 June 2021.

I am not sure how this rumour started but PVA is here to stay.

It is a complete winner for UK importers because the payment of VAT is deferred when goods arrive in GB from anywhere in the world, and is declared instead as a reverse charge entry on the importer’s next VAT return.

It is a cashflow no-brainer. I suspect the confusion with this date relates to the time when the need to make a full customs declaration for goods arriving from the EU can be delayed.  

Myth 2: Applying the reverse charge for imported goods with PVA always produces a nil payment outcome on a VAT return.

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Replies (4)

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By cereus77
20th May 2021 14:05

One thing I wish was a myth about the UK VAT situation post Brexit is the fact that we are now being charged UK VAT on imports which were previously VAT free. An example is eBay where the majority of sellers in certain categories are not VAT registered - for example antiques and collectibles but we are now being charged 20% import VAT plus admin charge to purchase anything from Europe - exactly the same situation as with the US for example. It’s a significant deterrent to cross border commerce I feel.

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By AndyFroggatt
20th May 2021 14:27

Just checking the relationship between the advice above and the answers to questions on previous VAT Q&A . I am missing something simple as to who does what on this and when.

Question 1: “I don’t know where to access the Monthly Postponed Import VAT Statements (MPIVS).”
Logging into your government gateway does not give you access to the MPIVS, it seems you need to log in via a specific GOV.UK postponed accounting link and then log into your government gateway, Bookmark the link so you can get back to it.
Don’t forget to download your MPIVS or print them out, because they are only available online for six months.
Question 2: “I haven’t paid any import VAT and not had any paperwork from HMRC or freight agent.”
Some freight agents default to using postponed import VAT accounting, even if you’ve not asked them. So if you’ve not done so already, enrol for the online Customs Declaration Service (CD). You will then receive a monthly reminder email and link to log onto your gateway and find your MPIVS. So even if you didn’t ask and your freight agent assumed you want to postpone, you will not be in the dark as the monthly email reminder will prompt you to log in and capture any import VAT that you didn’t know about.
As the MPIVS only stay online for six months, the scenario could arise where you are not aware you are postponing VAT and when you do realise and enrol for the service, those earlier statements may no longer be visible. So do check sooner rather than later that you have access to CDS/MPIVS before it is too late.
Question 3: “The invoice from the EU supplier has no VAT on it, do I reverse charge like before?”
If the invoice is for services, then you do still reverse charge those invoices as you did prior to Brexit. But if the invoice is for goods from the EU, then we no longer reverse charge.
Imports where the freight agent pays the import VAT at the dock/port or where you have a deferment account, then you will receive a C79 in the post from HMRC and this C79 is your document to reclaim the VAT.
Imports where you are using postponed import VAT accounting – whether by request or freight agent assumption – then you use the government gateway to access your MPIVS.

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Maytuna
By DJKL
20th May 2021 17:48

Neil, can you confirm that if one now brings back to the UK from the EU personal/household items currently abroad (in a holiday home) then notwithstanding they may originally have been purchased in the UK and taken to said home, if they now are brought back through customs, and their value is over £390, then duty and vat will apply to them on entry to the UK (And a declaration is now needed with item codes etc if their value is >£390)

I am aware there is a relief if moving residence to the UK re household items but despite asking my MP and HMRC I have not been able to find any relieving provisions re personal items/household goods from holiday homes.

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Melchett
By thestudyman
20th May 2021 20:28

Once again Neil, thank you very much for your VAT articles - VAT is never the easiest topic of accounting to keep up to date, but you make it a little more pleasant.

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