How can I manage my VAT on imports from Great Britain?

Courtesy of Tax Assist Accountants Portlaoise

I am a small business importing goods from Great Britain. Since 01 Jan I have to pay VAT when I import the goods to Ireland and this is having an effect on my cashflow. Is there anything I can do to avoid this?

Since 01 January 2021 any goods purchased from Great Britain are classified as imports. Therefore, import VAT is due as soon as the goods reach Ireland. This can have a negative effect on cashflow as you need to have the money then and there to pay the VAT and wait for your VAT return to reclaim it.

However, if businesses wish to avoid paying VAT at the point of importation they may apply to Revenue for Postponed Accounting in respect of these imports.

Postponed Accounting arrangements enable a business to self-account for VAT on imports on their VAT return rather than paying as soon as the goods reach Ireland. This means that import VAT, subject to the usual rules on deductibility, may be reclaimed at the same time as it is declared on a VAT return. 

In other words, the import VAT will be recorded as both VAT on a sale and VAT on a purchase in a similar way to the manner in which goods acquired from other EU countries are currently recorded on the VAT return.

This alleviates the burden on cashflow by allowing the business to account for the import VAT in their VAT return rather than paying on the VAT at the point of import and waiting for their next VAT return to reclaim it.

If you are looking for an accountant to help with VAT returns or Postponed Accounting for VAT then contact us here to arrange a consultation.