There has been a significant update/recent change in Import VAT rules. For businesses registered for VAT in the UK, it will be possible to account for import VAT on VAT returns for goods imported from anywhere in the world from January 2021. Rather than having to pay VAT upfront and recover it later, businesses will declare and recover import VAT on the same VAT return, more commonly known as “postponed accounting”. It offers a simplification and cash flow advantages compared to the current rules for imports from outside of the EU. The normal rules about what VAT can be reclaimed as input tax will apply.WHEN CAN BUSINESSES ACCOUNT FOR IMPORT VAT?You can start accounting for import VAT on your VAT return from January if; ⇒ The goods you import are for use in your business ⇒ You include your EORI number, which starts with “GB” on your customs declaration ⇒ You include your VAT registration number on your customs declaration, where needed On the other hand, you will not be able to account for import VAT on your VAT return if you are authorised to use simplified declarations for imports and you complete your simplified frontier declaration before 1 January 2021, even if you complete your supplementary declaration after this date. Traders using postponed accounting will receive a monthly statement of all their imports where they opted to postpone the import VAT through the customs clearance paperwork. The statement will be available to download and keep, and will show the total import VAT postponed for the previous month that should be included on the VAT return.VAT RETURN CHANGES DUE TO NEW IMPORT VAT RULES: As a result of the above, and “postponed accounting”, there will be changes as to how to VAT return should be completed. It will be reported in the subsequent monthly or quarterly UK VAT return, with the reporting as follows; ⇒ Box 1 – Total VAT due in this period on imports accounted for through postponed VAT accounting ⇒ Box 4 – Total VAT reclaimed in this period on imports accounted for through postponed VAT accounting ⇒ Box 7 – Total value of all imports of goods included on your online monthly statement, excluding any VAT.Click here for an up to date guidance from HMRC to check when you can account for import VAT on your VAT return. Get in touch with Naail & Co for further advice or click here to book a telephone appointment, for further information on this update for Import VAT.