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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:
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