As part of VAT changes after Brexit, all of us now have some experience with postponed VAT accounting that was introduced from 1st Jan 2021.
The variety of questions posed about the issue to us indicates that there are a lot of real-life scenarios out there that are causing confusion.
This article offers answers to some representative questions/examples.
Postponed Accounting for VAT FAQs
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, enroll 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 stays online for six months, the scenario could arise where you are not aware you are postponing VAT, and when you do realise and enroll 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 afterward.
The takeaway here is that your accounts team needs 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 afterward (C79) or by postponing (MPIVS).
For a fully taxable business that can reclaim all input tax, it is still important to 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 that 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.
Need help with Postponed VAT accounting after Brexit?
Contact MCL Accountants on 01702 593 029 to optimise your tax position or if you need any assistance with your VAT returns, company accounts, or more information about the new rules for Postponed VAT accounting after Brexit.Tags: Brexit, VAT