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Postponed accounting announced for UK Importers
The Chancellor confirms that postponed accounting will apply from the end of the transition period, easing the cash flow pressure for UK businesses.
For the first time, at the end of the EU exit transition period, imports from the EU will be subject to 20% UK import VAT.
To ease trade friction, the Chancellor has confirmed as part of the UK’s annual budget announcement, that VAT postponed accounting will be available from the end of the transition period on 31st December 2020.
This provides a cash flow advantage for importers as it means that payment of VAT is not required for the goods to clear UK customs. Instead, the importer of record will be able to account for the VAT in their subsequent UK VAT return.
Currently, all goods bought from the EU can be imported VAT-free with no requirements for duties and Customs clearance procedures. For non-EU goods, import VAT is payable on entry and importers have to wait up to three months to claim input tax on their VAT returns.
For many businesses, the end of the transition period means businesses importing goods from the EU need to prepare for VAT, duties and Customs clearance procedures. The postponed accounting system is a positive step towards addressing concerns over cash flow problems.
Unsworth are working closely with our clients to support in preparing for the end of the transition period and the impending Customs formalities.
If you missed our latest webinar, click here to watch on-demand and start your EU exit preparations.