Brexit Hub | Postponed VAT Accounting for Sage 300 and Sage Intacct

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Postponed VAT Accounting

As of 1 January 2021 – with the end of the Brexit transition period occurring on 31 December 2020 – businesses registered for VAT that import goods into the UK from anywhere in the world can use a new system called Postponed VAT Accounting.

This lets you account for Import VAT on your VAT Return, rather than paying it immediately (e.g. at the port of entry).

It has been confirmed that this system will be in place regardless of the outcome of the ongoing UK-European Union (EU) negotiations. In other words, it will operate if there is a negotiated outcome, or if there is a no-deal scenario.

The purpose of Postponed VAT Accounting is to avoid an impact to your cash flow when importing. In fact, if your business already imports from outside the EU then you might see cash flow benefits because it removes the need to pay for the import VAT typically due.

The use of Postponed VAT Accounting is optional unless you defer the submission of customs declarations – such as making use of the initial six-month customs deferment period after the end of the transition period in which case it is mandatory.

Postponed VAT Accounting works a little like the Reverse Charge mechanism used when making purchases from EU today. That is to say you account for the VAT as both Sales and Purchase VAT on your VAT return thereby not incurring any actual cash flow impact.

Not using Postponed VAT Accounting and then importing goods from EU that are valued over £135 would mean you would be required to pay Import VAT at the point of entry into the country and then claim back the VAT subsequently once you have received a C79 certificate. The risks to your business by not using Postponed VAT Accounting are:

Negative impact on cash flow as you have to pay import VAT upfront and reclaim it later

Goods may get held up in customs awaiting payment of Import VAT

How can I find out more details?

We have complied a more detailed FAQ’s page which can be accessed here

How can Accord help us get ready for Postponed VAT Accounting?

There are some changes needed within your Sage 300 system to make it ready for Postponed VAT Accounting and we have bundled up this work into a fixed price to make it simple for everyone. You will get:

Configuration of new Tax Groups & Tax Classes

Mapping of these classes onto the correct boxes for your MTD

Provision of a Postponed VAT Accounting Report to aid reconciliation to HMRC Online Report

Briefing / Training session with one of our expert consultants

Fixed price set-up price of £500 for the first company plus £50 per additional company.

Order Form

Conclusion on Postponed VAT Accounting

Postponed VAT Accounting is intended to bring relief to businesses worried about importing goods. It’s fundamentally simple to use and should mean most businesses that currently trade with the EU are unimpacted by Brexit in respect of Import VAT.

There are no negatives when it comes to making use of Postponed VAT Accounting, so there can be few if any objections within most businesses.

However, it remains a new administrative requirement and one that’s not been tested yet in any business.

You should look at what’s required, try to spot any implementation sore points, and ensure you’re ready in time for 1 January 2021, when Postponed VAT Accounting is implemented.

Now The Legal Bit

The information provided here should be considered as Accord Consultings understanding of Postponed VAT Accounting. It should not take the place of you reading the VAT notices yourself or taking expert VAT advice for your business.

You can access the government advice by clicking here