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Before the UK left the EU, the VAT payable on goods moving between the UK and EU member states was managed through comprehensive EU VAT Directive (Council Directive 2006/112/EC) measures.
After leaving the EU, VAT management became an import consideration for traders exporting to EU member states, with VAT being due on import into the EU.
Accounting for VAT on Imports into the UK
UK import VAT is payable on import unless the business uses a VAT easement.
Available options for declaration are Postponed VAT Accounting (PVA), where VAT is accounted for in the business records, or payable via a Deferment, where the business holds a Deferment account and the VAT is paid against that account and reclaimed from HMRC later.
Importers may also consider other payment options, such as a CDS Cash account or Immediate payment. In these instances, a C79 certificate will be produced along with payment via a deferment account.
Importing goods for repair and re-export: Point of Order
Importing for repair and re-export
When goods are imported for repair, a Customs Special Procedure, such as IP (Inward Processing), must be applied.
PVA, VAT deferment, or any other payment method cannot be used to import goods for repair and re-export. VAT is not reclaimable for goods not owned by the importing business.
Inward processing is the method of VAT management that traders should use to avoid an outlay of unreclaimable VAT. Misusing PVA or VAT deferment measures will result in a VAT audit failure and penalties.
Importing zero-duty goods for repair
Where goods for import are zero duty, VAT is still payable and must be accounted for.
HMRC will require the full payment of VAT for goods imported for repair, even if the subsequent re-export is recorded.
VAT Audits are ramping up
The recruitment of 5000 Customs compliance staff was announced in the Autumn Budget 2024, with a further 500 announced in the March 2025 Spring Budget.
The UK Government is investing in HMRC’s debt management capacity to collect unpaid tax debt. VAT will fall into this category.
If you are interested in exploring this topic further, you might find it worthwhile to consider the training courses and live clinics offered by Strong & Herd LLP:
Focus On: VAT in International Trade
This session provides essential guidance on managing VAT in international trade. Participants will learn about UK VAT zero-rating for export supplies, required evidence, VAT obligations for receiving supplies, handling import VAT, and postponed VAT accounting (PVA). The course also covers reclaiming import VAT and when a UK business needs VAT registration in foreign markets, including the EU. Gain practical knowledge to ensure compliance and streamline your VAT processes.
Inward Processing Relief - IP Workshop
This course provides a comprehensive overview of Inward Processing (IP) and Outward Processing (OP), essential customs procedures that allow businesses to bring goods into the UK for processing, repair, or service without incurring unnecessary duties or VAT, especially when the ownership of goods being returned for repair, service or calibration are not yours. By using these special procedures correctly, businesses can significantly reduce costs and improve efficiency.
Customs Warehousing Explained - Technical Workshop
With the changes brought about by the UK's exit from the EU, more companies are turning to customs warehouses as a crucial tool for maintaining an efficient supply chain. This workshop provides a comprehensive guide to setting up a customs-bonded warehouse facility in the UK. You will learn how to improve cash flow, navigate new customs regimes and trade agreements, and save money using Simplified Procedures, all while ensuring compliance with post-Brexit customs requirements.
OneCall™ Email assistance as and when required; A one-call solution for all your import, export and customs enquiries. Export help. Import help. Customs help.
Stay informed about customs and international trade matters by subscribing to our OneCall™ service. This comprehensive offering includes a dedicated email helpline for support, timely practical updates direct to your inbox (Did You Know?), monthly UK Customs & Trade Briefings and access to an interactive members' area with an exclusive community for our subscribers.
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