The end of the Brexit transitional period on 31 December 2020 brought to an end previous VAT accounting practices relating to EU cross-border trade in goods.
Since 1 January 2021, imports from the EU have been treated in the same way as goods arriving from any other country. Import VAT, duty and procedures are complex, and those procedures are administered separately within HMRC and subject to different compliance requirements.
The transitional process has so far seen several stumbling blocks, particularly in relation to Postponed VAT Accounting (PVA). However, the process for this has now been refined and we have seen it work successfully for NHS bodies that undertake importing from the EU. We previously detailed the process of PVA, which you can find here.
In practise, there have been issues where clear instruction has not given to any intermediary being used to import goods on behalf of the NHS. The information requested varies between intermediaries and you should keep a written record of what is agreed and make sure this is communicated internally.
You will need to tell your intermediary how you want to account for import VAT so they can complete the customs declaration. This is very important as you cannot change how to account for import VAT on your customs declaration once it’s submitted.
One key element which has now helped the process is making sure the correct information is included on the declaration. For example, where using the CHIEF system to select to account for import VAT on your VAT Return using PVA you will need to enter ‘G’ as the method of payment in Box 47e along with the box 8 and 44 details.
It is essential that all departments in your organisation that are concerned with the import of goods are made aware of these new procedures, and this critical requirement to help move goods into the UK with minimal delays, whilst also ensuring that VAT is paid correctly.
You can find a full flow chart on the Government website to help guide you through the import process here. We have also summarised the key considerations specifically for NHS bodies which can act as a starting point for the process here:
The monthly postponed import VAT statement is divided into two parts and a summary of the contents of each page was published on the 24th September 2021: https://www.gov.uk/guidance/understanding-your-monthly-postponed-import-vat-statements
We regularly provide webinars to help guide you through VAT updates and changes, and you can find details of our upcoming sessions on our website.
If you have any concerns regarding these new procedures or would like more information, please contact your Liaison Financial VAT Advisor, or email us at firstname.lastname@example.org