Cash flow benefit for companies importing stock from outside the EU (including UK/EU trade).
As a result of Brexit and the UK becoming a third country, postponed accounting for VAT can now be applied to all non-EU imports of goods for resale since 1 January 2021. This treatment is now available to all VAT registered traders and applies to imports from all non-EU countries and not just the UK.
Trading businesses who historically have had to pay VAT at point of entry for stock arriving from outside the EU can now save the cash flow of the VAT that would have applied on the landing of this stock (23%).
This scheme benefits all traders in that:
- provides for postponed accounting for VAT on imports from non-EU countries
- enables you to account for import VAT on your VAT return
- allows you to reclaim VAT at the same time as it is declared in a return. This is subject to normal rules on deductibility.
The Revenue Commissioners may exclude traders who do not fulfil certain conditions and requirements from using this scheme which will include compliance with tax and customs law. A business may also be required to satisfy Revenue of the viability of their business operations and their capacity to pay their VAT liabilities.
To use postponed accounting, an importer should enter a code on the import declaration. This code will allow the VAT on import liability to be accounted for by the importer in their VAT Return. The VAT Return will contain new boxes (fields) to capture this information.
Talk to us on your requirements in this area and how we can assist your business.
We have advised a number of clients who are now saving on their working capital funding requirements and in particular on trade in goods between UK and Ireland.