Changes to Accounting for VAT on Imports for Users of Flat Rate Scheme

There are important changes from 1 June 2022 for small businesses using the Flat Rate Scheme who are importing goods and using postponed VAT accounting.

Those businesses using the Flat Rate Scheme must currently add the value of imported goods to the total of all their supplies before they carry out the scheme calculation.

For VAT return periods starting on or after 1 June 2022, they should no longer include import VAT accounted for using postponed VAT accounting in their flat rate turnover. The VAT due on any imports should be added to box 1 of the return after completing the Flat Rate Scheme calculation.

HMRC have issued the following updated guidance:

Complete your VAT Return to account for import VAT - GOV.UK (https://www.gov.uk/guidance/complete-your-vat-return-to-account-for-import-vat#if-you-use-a-vat-accounting-scheme)

Importers not using the VAT Flat Rate Scheme

HMRC have also updated their guidance for VAT registered importers not using the Flat Rate Scheme:-

Complete your VAT Return to account for import VAT - GOV.UK (https://www.gov.uk/guidance/complete-your-vat-return-to-account-for-import-vat)

These traders must account for postponed import VAT on their VAT returns for the accounting period which covers the date they imported the goods. The normal rules apply for what VAT can be reclaimed as input tax and the trader’s monthly statement will contain the information to support their claim.

HMRC is aware of the problems some importers are having when trying to access their monthly VAT statements. If you cannot access your statement or you’re having problems when viewing your statement, you should follow the guidance on how to complete a VAT Return if you’re having problems with your monthly statements (https://www.gov.uk/guidance/complete-your-vat-return-to-account-for-import-vat#access).

As long as you take reasonable care to follow the guidance, there will be no penalty for errors.