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VT Transaction+

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Purchase of goods from the EU (to GB only)

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Introduction

The following applies to purchases of goods (not services) from the EU by VAT registered businesses in GB or 'Great Britain' (i.e. the United Kingdom excluding Northern Ireland) on or after 1 January 2021. For businesses trading in Northern Ireland please refer to Purchase of goods from the EU (to NI only).

The information on this page is for general guidance only and should not be taken as definitive VAT advice, since individual circumstances may vary. For details of your obligations on purchases of goods from abroad, please refer to HMRC guidance.

Purchase of goods from the EU (to GB only)

Note that this method can also be used to account for Postponed Import VAT on goods purchased from non-EU countries.

Postponed VAT Accounting (PVA) for all imports

On or after 1 January 2021, purchases of goods from EU suppliers are classed as imports, as is currently the case for purchases of goods from the rest of the world.

UK VAT is due on imports, however payment of import VAT can be postponed for all imports into the UK (not only from the EU but also the rest of the world). This is known as Postponed VAT Accounting (PVA), which allows you to account for and pay for import VAT on your VAT return, rather than at the point of entry into the UK.

This operates by means of an online monthly statement from HMRC which a business can download. This will show postponed import VAT on goods the business imported in the previous month. which they should include in their VAT return as follows:

oBox 1: Include VAT due in this period on imports accounted for through postponed accounting

oBox 4: Include postponed import VAT that you are reclaiming as input tax in this period (subject to the normal rules on input tax deduction)

oBox 7: Include the total value of all imports of goods, excluding any VAT

Boxes 2 and 9 will therefore not be applicable for businesses trading in Great Britain as these relate to intra-EU acquisitions of goods (and purchases of goods by Northern Ireland businesses from the EU).

Most businesses will have the option to use PVA, however for some businesses it will be mandatory and for others it will not be available to use. Please check HMRC eligibility requirements here.

You may also have to pay customs duty on imports (and excise duty on any imports of alcohol or tobacco), however this is separate to VAT on imports. Please refer to HMRC guidance for details.

To account for PVA on VT Transaction+:

Please note: The guidance below previously advised in Step 3, to enter the net value of the transaction in the Net column of the debit entry of the journal. This is incorrect and 0.00 should be entered. The guidance below has been corrected to reflect this.

1.For imported goods, enter the purchase in the usual way (i.e. using the PIN or PAY transaction functions), but do not enter any VAT. If using the PIN transaction, select 'Normal' in Type of purchase (for VAT purposes). Do not tick the Purchases of goods from the EU option as this is for Northern Ireland businesses only. E.g. for a purchase of £100.00, enter £100.00 in the Total and Net fields, and leave the VAT field blank.

2.You must account for postponed import VAT on the VAT return for the accounting period which covers the date you imported the goods. The monthly online statement from HMRC will show postponed VAT on imports from the previous month and will be available to download in the first half of each month.

3.Using information from the online monthly statement of postponed VAT, enter a journal (using the JRN function) to:

ocredit the VAT Output account with the import VAT due

odebit the VAT Input account with the same amount (assuming you can fully reclaim input VAT)

For example, if your postponed VAT statement shows import VAT due of £20, you would enter the following:

Postponed VAT journal

4.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 £

Output VAT due on imports

Box 1

20.00

Input VAT reclaimable on imports

Box 4

20.00

Net value of imports

Box 7

100.00

If these do not appear correctly when running the VAT return, check that the following actions have been done:

the dates of both the purchase transaction and PVA journal are in the period covered by the VAT return

you have entered the PVA journal correctly as described in Step 3. above

you have entered no VAT on the purchase transaction as described in Step 1, above

you have not changed the analysis account for the purchase transaction to be outside the scope of VAT