HMRC updates guidance on accounting for import VAT

HMRC has updated its guidance on accounting for import VAT on the VAT return, to address a problem with monthly VAT statements which has caused difficulties for businesses which use simplified declarations for imports.

Where businesses import goods into the UK using simplified declarations, they are required to submit their supplementary declarations by the fourth working day of the month following the month of import. Monthly VAT statements will show the total import VAT postponed for the previous month. HMRC has, however, identified an issue where entries are not being allocated to the correct monthly VAT statement and is seeking a solution to this problem. In the meantime, businesses have two options:

• they can use the figures on their import VAT statements to complete their VAT return, or
• if they can identify the affected entries, they can reallocate them to the correct monthly statement and use these figures to complete their VAT return

Businesses are advised to check their Quarter 1 VAT returns if they had problems with their January and February 2021 statements, and to follow HMRC’s guidance on how to correct errors if necessary. HMRC state that, ss long as reasonable care is taken to follow the guidance, there will be no penalty for errors.