HMRC has issued guidance on their website for businesses to delay the declaration of goods imported between 1st January 2021 and 30th June 2021.
Check when you can account for import VAT - https://www.gov.uk/guidance/check-when-you-can-account-for-import-vat-on-your-vat-return
Declaring goods brought into GB from the EU - https://www.gov.uk/guidance/declaring-goods-brought-into-great-britain-from-the-eu-from-1-january-2021
Businesses must complete a supplementary declaration for the goods when they move into free circulation. This must be done using a CHIEF (CDS) compliant software package or may be handled on your behalf by a Freight Forwarder or Customs Agent. No changes are being made to Access software to create this supplementary declaration. This is NOT Postponed VAT Accounting (PVA).
General Principle:
The Purchase Invoice regardless of whether this is from the EU or from a NON-EU Country should be processed as VAT code 0 (0%).
This will update boxes 1, 4 and 7 on the VAT return so that there is no value in box 5 from this transaction (box 1 less box 4 = zero).
VAT Import duty is payable on imports immediately to the Freight handler (unless you adopt PVA) and this will have an effect on cashflow, as the VAT can only be recovered on a subsequent VAT Return which may sometime later.
HMRC have introduced the concept of ‘Postponed VAT Accounting’ (PVA) for VAT on imports (not to be confused with ‘Deferred VAT’). It allows you to declare the VAT on your VAT Return rather than paying it immediately, and this value is offset by reclaiming the VAT at the same time. This results in no adverse effect on your cashflow.
Due to constraints within Dimensions, it is not possible to use VAT codes designated as ‘Reverse Charge’ for VAT Credit Journals. Reverse charge codes are primarily designed for use within the purchase ledger and VAT debit journals only.
Therefore, it is necessary to create a new VAT code that accounts for VAT on Imports correctly both in the accounts and on the VAT Return. We recommend you create a new VAT code so that it is possible to segregate all the entries into their respective types.
For example.
1. Go to the System Menu in Dimensions.
2. From Here you will see Vat Rates choose this option.
3. Then Choose Insert.
4. Enter a Vat Code e.g. IMPV
5. Enter a Description e.g. Postponed Vat Due on Imports
6. Select the relevant option (Fully/partially/non recoverable)
7. Then select the relevant options within the Update VAT Return box
8. This new VAT code will be used on nominal Credit VAT journals and update box 1 & 4. It will have no impact on box 5
For more information on how your business should process the VAT due on Imports, please speak with your Customs Agent.
With the above highlighting one possible way to achieve this in Dimensions.
Vat Due on Imports including postponement of Vat liability (PVA)
Updated over a week ago