UK Budget 2020 - VAT postponed accounting

Mar 16, 2020

 

Prior to the Budget, the Government had previously only intended to introduce postponed accounting for VAT from 1 January 2021 if the EU transition period ended in a no-trade deal scenario.

On Wednesday, the Budget announcements extend the availability of postponed accounting for import VAT to post transition period trading arrangements, in whatever form these may take.  This is a positive move and one that Chartered Accountants Ireland has been calling for.

This means that from 1 January 2021 VAT will not be immediately due at the point of import when buying from outside the UK, including the EU, but instead will be payable on the trader’s next VAT return when they will also be able to simultaneously claim relief for the VAT paid, in most cases. According to the Budget publications, this measure is expected to cost the Exchequer just over £3.5 billion in 2020-21.