As a small business owner, do you need to pay VAT when you import from the EU? The short answer is yes.
UK VAT will be charged before the goods can be released from customs. VAT registered businesses can reclaim this VAT back on their VAT return once they have been issued with a C79 certificate.
However, to help cash flow the HMRC have introduced “postponed accounting” for VAT registered businesses.
What is “postponed accounting”? A business can elect to use “postponed accounting” to account for the output and input tax on their VAT return, instead of making payment at the border only to reclaim it on their tax return later.
This has two main advantages:
- Firstly, it can assist with the cash-flow of a small business, as the VAT payment doesn’t need to be paid until later.
- Secondly, also simplifies the process and means that goods do not get held in customs if VAT isn’t paid.
Businesses make the election when making their customs declaration. If a business uses a freight handler, they will need to be advised that you wish to use postponed accounting.
Remember that this is optional and VAT can be paid upfront if your business wishes.
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