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VT Transaction+

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Import VAT - Option 2: Pay import VAT when goods enter country

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The following information is for general guidance only and should not be taken as definitive VAT advice, since individual circumstances may vary. To determine the VAT treatment for your particular transactions please refer to HMRC guidance or seek tax advice from an accountant.

Introduction

Where import VAT is due on goods purchased from abroad, most businesses can either pay import VAT when goods enter the country, or postpone payment to when they submit their VAT return .

If they pay import VAT when goods enter the country, this can then be reclaimed upon receipt of a C79 certificate.

To account for payment of import VAT when goods enter the country in VT Transaction+:

(Note: If you are on the cash accounting VAT scheme, refer to the instructions here instead)

1.Enter the purchase of goods from the supplier in the usual way (i.e. using the PIN or PAY transaction), but do not enter any VAT. Select Normal in the Type of Purchase (for VAT purposes) section. For example, for a purchase of £100.00 worth of goods:

PVA invoice 2

A purchase invoice entry for imported goods from a supplier

2.Usually, the courier company delivering the goods pays the import VAT to HMRC on your behalf, and then invoices you to pay the import VAT (usually along with other charges). To record this, enter a PIN/PAY transaction, dated when you receive the invoice/make payment:

import_VAT_PIN

A purchase invoice entry for import VAT recharged by a courier company

You need to create a new account 'VAT - Import VAT' in the Creditors ledger, for the analysis account, which should be set to being outside the scope of VAT. The purpose of posting it here is so that it will not yet appear on the VAT return, as you cannot reclaim it until you have received the C79 certificate.

3.When you receive the C79, you can then reclaim the import VAT by moving the VAT from the VAT - Import VAT account to the VAT - Input VAT account with the following journal. Leave the Net field as 0.00. The journal should be dated when you receive the C79. The input VAT will then be included in Box 4. when you run the VAT return.

JRN_import

Journal to transfer import VAT to the VAT - Input account when a C79 is received

The entry details field can be used to enter information to trace the entries to the relevant supporting documentation, e.g. the invoice number of the related purchase of goods, and the entry number of the import VAT on the C79.

Completing your VAT return

When the VAT return is run, the appropriate boxes will be populated with the required values from this example, as follows:

VAT return element

Included in VAT return

Amounts included £

Input VAT reclaimable on imports

Box 4

20.00

Net value of imports

Box 7

100.00

Other points

The C79 is usually received in the month following the importation.

If you have not received the C79 by the time you are due to submit the VAT return, you need to adjust Box 7. to remove the net value of the purchase. This is because you will not be able to reclaim the import VAT in that return and therefore the net value of the related purchase cannot be included in that return. You can remove it from box 7. by changing the purchase transaction entered in step 1. to being outside the scope of VAT - right-click on the transaction in an unsaved VAT return and choose the Change Transaction To Outside The Scope Of VAT option from the pop-up menu.

If you have set up VAT cash accounting in VT Transaction+

According to HMRC guidance, 'you cannot use the VAT Cash Accounting Scheme for goods you import'.

To exclude import transactions from the cash accounting scheme and account for import VAT paid on VT Transaction+, carry out steps 1. to 4. above, except for the following differences:

Step 1: Ensure the analysis account used to record the purchase is set to being outside the scope of VAT - to change this, please refer to Transactions outside the scope of VAT

Step 3: On the entry to the VAT - Input account, enter the net value of the purchase in the Net column.

The boxes in the VAT return will then be populated with the same figures shown in Step 4 above.