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Ready for VAT changes from 1 January 2021?

From 1 January VAT registered business importing goods into the UK will need to apply postponed VAT accounting rules.

This change has come about as a result of the Brexit transitional period coming to an end on 31 December 2020. From 1 January 2021 these new provisions kick in.

Nature of postponed VAT accounting

Under postponed VAT accounting, you declare and recover VAT on the same VAT return.

Normal VAT rules continue to govern what can be reclaimed.

The method of accounting has a significant benefit on importers as the importer does not have to pay the VAT upfront and recover it on a later return.

Who can use postponed VAT accounting

Postponed VAT accounting can be used from 1 January 2021 if your business is registered for VAT in the UK and you import goods into Great Britain from anywhere outside the UK.

These rules also apply to imports into Northern Ireland from outside the UK and the EU.

There are no changes to the VAT treatment of goods moved between Northern Ireland and the EY, or in the way the VAT is accounted for.

Accounting for VAT on your VAT return

You can account for import VAT on your VAT return if:

  • you import goods for use in your business
  • you include your EORI number, which starts with ‘GB’ on your customs declaration; and
  • you include your VAT number on your customers custom declaration if required.

If you use customs special procedures, you can account for the import VAT on your VAT return when you submit the declaration to release those goods into free circulation.

Completing your VAT return

As a result of the introduction of postponed VAT accounting there are a number of changes required to the preparation of VAT returns from 1 January 2021.

A monthly statement showing the total import VAT postponed for the previous month which will need to be included on the VAT return.

In addition, there are a number of changes to the figures required to be included in Boxes 1, 4, and 7

  • Box 1 – include VAT due in the period on imports accounted fro through postponed accounting
  • Box 4 – include VAT reclaimed in this period on imports accounted for through postponed accounting
  • Box 7 – include total of all imports of gods shown on your monthly statement, excluding any VAT

Consignments not exceeding £135

Where the value of the consignment is less than £135, VAT will be collected at the point of sale, rather than at the point of importation.


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