8th Dec 2021
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Should I journal postponed VAT?
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We usepostponed VAT accountingand have an agent who deals with our imports so when we receive an invoice from them it will only have charges for clearance, security fees etc but it does have the IEAD doc attached to it which shows the VAT and duty.
My question is: how should Iaccount for the vat and duty? Should i journal the amounts when i receieve the C79 and change the VAT code so it shows on the VAT return? Is this the best and accurate way?
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Replies (7)
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By Wanderer
08th Dec 2021 12:24
Think you're barking up the wrong tree. PVA entries don't appear on the C79s.
Thanks (0)
By Jason Croke
08th Dec 2021 12:55
If you are using postponed VAT then you should not be getting a C79.
At importation/border, either the import VAT is paid at the dock (by your agent) or no import VAT is paid at all and it is instead postponed.
If the VAT is paid at the dock by the agent, you get a C79, in effect a receipt from HMRC confirming the import VAT was paid. You reclaim the VAT shown on the C79 as a VAT only entry in the accounts (the purchase the VAT relates to will have been input earlier in the accounts as a zero rated purchase,.
If you postpone VAT, nobody is paying anything to HMRC at the dock, instead, you are trusted to record the import VAT on your VAT return (Box1) and reclaim the same amount in Box 4 as input tax. You download from the government gateway a monthly postponed import statement which is sort of like the C79, it is the official proof from HMRC of the VAT you need to postpone.
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Replying to Jason Croke:
By Wanderer
08th Dec 2021 13:06
All true Jason, & fine & dandy in theory but, in practice, neither the C79s nor the PVA statements tie up to reality. (Separate from all the system errors that HMRC made at the beginning of the year)
Thanks (1)
Replying to Jason Croke:
By Louisa19
08th Dec 2021 14:08
Hi Jason, thanks for the reply. I'm obviously getting confused with PVT.
We have a VAT duty deferment account which means we get a C79 monthly, along with deferment statements.
Would it be best to do journal when the money has been taken out and once I've received both the C79 and statements? For example, i would dr VAT dr Duties and cr Bank (the payment comes out on the 15th of every month).
Thanks (0)
Replying to Louisa19:
By Wanderer
08th Dec 2021 14:46
So are you actually paying all the VAT via your deferment account?
If so you aren't doing PVA at all! I'd consider changing over to PVA if that's the case.
Thanks (1)
Replying to Wanderer:
By Louisa19
08th Dec 2021 14:52
That's why I said, "I'm obviously getting confused with PVA". We actually have a VAT deferment account.
Thanks (0)
Replying to Louisa19:
By Jason Croke
08th Dec 2021 15:01
Wanderer's point is that you are using a duty/VAT deferment account and that is perfectly fine and yes, you will get C79's....but you can switch to postponed import VAT Accounting and that does away with you having to pay any VAT to HRMC first or wait for C79's.
If you need the deferment account because you also pay import duty, what you can do is get your agent to put import duty to your deferment account but postpone the VAT, that way your deferment account only has duty going through it, whilst the VAT is accounted for on your VAT return. Much better for cashflow.
it is not always easy to tie up the C79 against the original purchase from the supplier, as the C&( VAT will include currency conversion, freight costs plus duty before VAT is added, so an item purchased from China for $1,000 could well be £1,100 after currency, then add £100 for freight and £50 for duty so the VAT is calculated on £1,250 and the C79 will show VAT of 3250 but your accounts will only show a purchase of $1,000/converted to £1,100
You can do this many ways, you could just add a journal/manual entry to get the correct VAT (C79 figure) onto the accounts/VAT.
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