The import VAT is accounted for on your VAT Return in three of the ‘9 boxes’ that you need to fill in.
Note that the fast-changing world of Brexit means that some advice you might see about which boxes to complete could be out of date.
The following has been recently confirmed by HMRC:
Box 1 – VAT due on sales and other outputs: Include the VAT due in this period on imports accounted for through postponed VAT accounting.
Box 4 – VAT reclaimed on purchases and other inputs: Include the VAT reclaimed in this period on imports accounted for through postponed VAT accounting.
Box 7 – Total value of purchases and all other inputs excluding any VAT: Include the total value of all imports of goods included on your online monthly statement, excluding any VAT.
If you don’t use postponed VAT accounting, and instead pay the VAT immediately when the imported goods enter free circulation, you will need to complete boxes 4 and 7 only.
Note that these values can’t be manually adjusted in the VAT return boxes under Making Tax Digital (MTD) and must be recorded in the main record-keeping software.
Key to managing postponed VAT accounting are the online monthly statements. This new report will show simply the import VAT that has been postponed during the previous month.
The C79 report should continue to be used for VAT you’ve paid at customs (that is, that’s not been postponed).
The postponed accounting report will only show imports for which there have been customs declarations and therefore won’t show imports that have been deferred.
If declarations have been deferred, you’ll need to estimate import VAT and then correct it in your next VAT Return once the declaration has been prepared and the calculated import VAT appears on a subsequent report.
Remember that import VAT should be calculated after duty and other costs. Because of this, it’s unlikely to be acceptable to estimate import VAT based on the supplier invoice alone.
The postponed accounting report will form a vital part of your VAT accounting records. Therefore, you’ll need to download and retain copies for your records in case the information is no longer available online.