Delayed customs declarations and postponed VAT accounting

On 10 June 2021 HMRC published a policy paper referring to an extension to the period for which customs declarations can be delayed when businesses import non-controlled goods from the European Union (EU) into Great Britain (GB).

Since 1 January 2021 businesses that import non-controlled goods from the EU into GB have been able to delay making customs declarations in relation to those goods for a period of up to 175 days from the date of import. This easement was due to end on 30 June 2021, but has now been extended to 31 December 2021. VAT registered businesses that adopt delayed declarations must apply postponed VAT accounting and declare the import VAT due on the VAT Return for the VAT accounting period in which the goods are imported.

It is not possible to delay customs declarations in relation to controlled goods such as alcohol and tobacco.

While VAT registered businesses that adopt delayed declarations must apply postponed VAT accounting, postponed VAT accounting can be used by any VAT registered business that imports goods into:

  • GB from anywhere outside the UK, or;
  • Northern Ireland from anywhere outside the UK and the EU. (A measure similar to postponed VAT accounting applies when VAT registered businesses in Northern Ireland acquire goods from suppliers in the EU.)

Postponed VAT accounting provides a cash flow advantage compared to paying import VAT at the time of import and we are not aware of any plans to remove its availability. We have generally been recommending that clients use postponed VAT accounting and notify the customs agent or freight forwarder that they appoint of this so that the appropriate entry can be made on the customs declaration. Businesses that import goods in circumstances where it is the supplier that arranges for the customs declarations to be completed on behalf of the buyer, for example, by a freight forwarder, should notify the supplier of their preferred method of accounting for VAT on the imported goods. A written record should be kept of what is agreed.

The extension to the period for which customs declarations can be delayed when businesses import non-controlled goods from the EU into GB is welcome, but our general advice is that most businesses that import goods should appoint a business such as a customs agent or freight forwarder to make the customs declarations on their behalf as soon as practically possible. The easement that has been available since 1 January 2021 has always been a facility to delay making the declarations. The declarations will, however, need to be made at some point. As few businesses have the resources in-house to make the declarations our general advice to appoint a business with the resources to make the declarations.

For specific advice and to find out more about how Garbutt & Elliott LLP can help your organisation deal with the complexities of VAT and customs duties please contact our VAT & Customs Duties Manager, Naveen Sahney, on nsahney@garbutt-elliott.co.uk