Postponed accounting: Your questions answeredby
Four months after Brexit changed the UK VAT regime, Jason Croke tackles some of the queries raised about postponed accounting in the Any Answers forum.
As we move into May, a good four months into Brexit, we now have some experience with postponed VAT accounting. The variety of questions posed about the issue in the Any Answers section indicates that there are a lot of real life scenarios out there that are causing confusion. This article offers some answers to some representative examples.
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.
It is important to remember that unless you are using the same freight agent every time, that your imports will be handled by different couriers and freight agents and unless they are instructed beforehand, then some will default to postponed import VAT accounting, some will just use their own deferment account and recharge you and the C79 will arrive in the post afterwards. The takeaway here is that your accounts team need to be aware of these two different ways in which VAT can be treated on imports and they need to know the difference and when to use the appropriate VAT codes.
Question 4: “I was expecting a C79 but have not received it in the post as yet?”
First check your paperwork, the freight agent may have defaulted to postponed VAT without telling you. C79s are sent in the post and so it is possible for them to get lost in the post, you can request copies from HMRC.
Question 5: “How do I account for import VAT in my accounting software?”
Different software has different ways of dealing with import VAT, remember that import VAT can be paid by freight agent/deferment and then reclaimed afterwards (C79) or by postponing (MPIVS).
For a fully taxable business that can reclaim all input tax, it is still important to be get the coding/data entry correct, because you still need to ensure you are compliant for Making Tax Digital (MTD) purposes. Remember that MTD will apply to all VAT registered businesses from April 2022.
For businesses which are partially exempt, it is especially important to get the VAT coding correct, as a partially exempt business may not be able to reclaim all of the VAT it incurs, including import VAT. Speak with your cloud software providers for an update on what coding to use.
Brace for Brexit hub
Some of the frustrations relating to Brexit have been around having to do things differently, but hopefully this article has answered some of your questions.
Some of these points and many others are covered in more detail on AccountingWEB's Brace for Brexit hub.
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Jason has over 20 years’ experience working exclusively in indirect taxes (VAT, import duty, SDLT) with owner-managed businesses, corporates and not for profit sectors. He particularly enjoys challenging HMRC decisions, representing clients in tribunals or during inspections.
Experience includes land and property, partial exemption and...