Before Brexit companies could import products in the UK without any formalities while crossing the borders. Currently, Great Britain is out of the EU and that means that imports have to be declared and VAT + custom duties need to be paid on import.
Postponed accounting is a way of making imports easier for UK companies at least in terms of VAT.
With postponed accounting, a business can declare and recover VAT on imported products on the same return instead of paying VAT on import and recovering it later. This increases cash flow for businesses and simplifies the process. At the same time accounting for VAT on imports will not be a reason to halt a company’s products at customs.
Any business that is registered for VAT in the UK can apply for postponed accounting on VAT. This application is related to imports in Great Britain and also Northern Ireland from outside the UK and EU.
When companies import products over £135 then VAT is payable. With postponed VAT accounting, a company accounts for output and input VAT on the same VAT return similar to reverse charge.
HMRC has published a guidance for the new postponed VAT accounting rules for imports into the UK from EU and non-EU countries. Taxpayers do not need to apply for the scheme.